ORDER M.V. Tamaskar, J. 1. By this petition, the validity of the Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991 (Act No. 25/91) as amended by the Amendment Act No. 26/91 is challenged by the petitioners through its Association and by themselves forty-eight in number, holding stage carriages, contract carriages, All India National permits. The operators, most of whom are fleet owners, are operating on various routes, some of which are short distance long distance, some on Kachha route i. e. which is not motor able for the whole year and some on Pakka route, the distinction which was statutorily recognized, reference to which will be made at later stage in this order. The State of Madhya Pradesh has entered into reciprocal agreements on interstitial routes with other states and certain mutual concessions and exmeptions in respect of tax for Operating have been granted. There are also operators, inter statal, on non-reciprocal basis. Apart from stage carriages and contract carriages defined as Public Service Vehicles, there are other Public Service Vehicles, which are either kept for use loosely called spare vehicles, which in the ordinary course of operations, are often used on break down of buses, emergency or on temporary permits to cater the needs of travelling public. The Madhya Pradesh State Road Transport Corporation, which is owned and managed by the State, has large number of buses, plying on all types of routes, having major share, in extending facilities to the travelling public in the State and interstatal routes. The buses are of different categories, such as Air-conditioned, Deluxe. Express and ordinary services, with different seating capacities. Ordinarily a bus has fifty seater arrangement, excluding driver and conductor. Apart from the said vehicles there are private services vehicles, Omni-buses, Educational Institution Buses. In the present petition, we are not concerned with small vehicles i. e. cars, motorcycles, scooters, mopeds, etc. Nor are we required to decide any question regarding goods services vehicles, though incidently some arguments based on discrimination have been urged on the grounds of Art. 14 of the Constitution of India. 2. In the present petition, we are not concerned with small vehicles i. e. cars, motorcycles, scooters, mopeds, etc. Nor are we required to decide any question regarding goods services vehicles, though incidently some arguments based on discrimination have been urged on the grounds of Art. 14 of the Constitution of India. 2. At this stage, it will be useful to refer to the vehicle population in the State, as reflected in Annexure R-5 along with the return filed by the State : As on No. of Vehicles 31-3-1981 3,06,396 31-3-1982 3,49,987 31-3-1983 3,95,727 31-3-1984 4,73,628 31-3-1985 5,55,906 31-3-1986 6,42,712 31-3-1987 7,43,580 31-3-1988 8,78,837 31-3-1989 10,54,715 31-3-1990 12,51,411 31-3-1991 14,39,124 Out of the said vehicles, 80% are small vehicles. Yet another important date is regarding the coverage in milage by the M.P.S.R.T.C. and Private Operators, as reflected in the statement of the Chief Minister (Annexure 'G') at page 84 of the Paper Book. There are total 16,000 buses which are registered under the Motor Vehicles Act. Out of the said figure 13,000 buses are owned by private operators, whereas the M.P.S.R.T.C. possess 3000 buses. While the three thousand buses have coverage of 7 Lac Kilometres, the rest i. e. 13.000 buses have only a coverage of 2 Lac Kilometres. Out of 13,000 private owned buses, 6000 buses run on various permits under the Motor MPJR (2) R 62 Vehicles Act and it is said that 7000 buses are either spare or stand-bye. We are not concerned at this stage as to allegations of misuse of these 7000 buses on the route. 3. It will be useful to deal with the historical background of the Motor Vehicles Taxation in Madhya Pradesh. The Motor Vehicles Act, 1939, operated in the field for purposes of Registration, control and other allied matters in relation to motor vehicles. The Act of 1939 has now been replaced by Act No. 59;88 i. e. The Motor Vehicles Act, 1988. 4. As regards taxation, the earliest Act in Madbya Pradesh Mahakoshal region (old C. P. & Berar) was the C. P. & Berar Motor Vehicles Taxation Act, 1947 (Act No. 6/47). On 1-11-1957 the Act was made applicable to the whole of Madhya Pradesh by Extension of Laws Act. The State of Madhya Pradesh enacted Madhya Pradesh Motor Vehicles (Taxation on passengers) Act, 1959 (Act No. 17/59), which became operative from 1-2-1961. On 1-11-1957 the Act was made applicable to the whole of Madhya Pradesh by Extension of Laws Act. The State of Madhya Pradesh enacted Madhya Pradesh Motor Vehicles (Taxation on passengers) Act, 1959 (Act No. 17/59), which became operative from 1-2-1961. By Act No. 19/62, the Madhya Pradesh Motor Vehicles (Taxation of Goods; Act, 1962 was enacted which came into force from 1-11-1962. By Act No. 13/78 the M. P. Motor Vehicles Taxation (Amendment) Act was enacted, operative from 27-5-1978. By the said Act, separate taxation on passengers and goods was abolished and a unified tax on motor vehicles was enacted known as Additional Tax on Public Service Vehicles payable by the owners on the basis of the seating capacity of the vehicels. The Scheme of the M. P. Motor Vehicles (Taxation of Goods) Act reveals that the tax was a component of the Fare or Tariff realized from passenger or owner of goods. By the change of scheme, as amended, in 1978, the unified tax, as it is known, became a liability of operator, The tax liability could be transferred by the operators or owners of the Public Service Vehicles on the passengers and in respect of goods vehicle to the goods tariff. 5. It is also to be found in this scheme of the Motor Vehicles Act that the fare table issued allowed charging or adding the tax towards it. The tax was in addition to the Motor Vehicles Food Tax payable under the M. P. Taxation Act, 1947. One important factor to be noted is that after the revision of Fare Table in 1978 i. e. introduction of Additional Tax and in the year 1985, there was revision of Fare only in the year 1991 vide Notification No. F.7-2/90-VIII revising fare of stage carriages from 12.5 paise per Kilometre to 1.4 piase per kilometre for eight months and 1.2 piase per kilometre for four months to 2 piase per kilometre. 6. 6. Yet another factor to be noted is that the rate of Additional Tax was increased by notification dated 7th June, 1991 vide Annexure R/11 which is reproduced below : No. 8-3-87-VIII.--In exercise of the powers conferred by subsection (3) of Section 3-A of the Madhya Pradesh Motor Vehicles Taxation Act, 1947 (No. VI of 1947), the State Government, hereby makes the following amendments in the Third schedule of the said Act, the same having been previously published in the ''Madhya Pradesh Rajpatra" (Extraordinary) on 7th March, 1991 as required by the second proviso to the said sub-section, namely :-- AMENDMENT In the said schedule, for the existing entries mentioned in column (2) against clause (a) and (b) of item I, and clause (b) of item 2 of the following entries shall be substituted, namely : 1. Stage Carriage-- (a) 20 Paise per seat per 10 Kilometres for the entire distance to be covered during the month in accordance with the conditions attached to the permit. (b) 20 Piase per seat per 10 Kilometres for the entire distance to be covered in accordance with the conditions attached to the permit during the period for which the permit is granted. 2. Contract Carriage-- (b) 20 Paise per seat per 10 Kilometres for the entire distance to be covered in accordance with the conditions of the permit". Incidently we may mention that this revision is a subject matter of challenge M. P. No. 1699/91 We express no opinion about the increase as number of petitions are pending and operation of the notification is stayed in M. P. 4163/91 dated 7-12-91 Annexure F/P 75 subject to payment at old rate. 7. We will take up the reasons for introduction and passing of the Act No. 25/91 and 26/91. It is stated in the return filed by the respondent State that the scheme of unified Motor Vehicles Act was adopted in State of Andhra Pradesh as back as on 5-2-1963 and from 1-7-1976 in the State of Karnataka. It is also stated that the National Transport Policy Committee had recommended a unified Motor Vehicles Tax and abolition of passenger and goods tax. The copy of the report of Committee is on record being Annexure R-l at page 132 of the Paper Book. It is also stated that the National Transport Policy Committee had recommended a unified Motor Vehicles Tax and abolition of passenger and goods tax. The copy of the report of Committee is on record being Annexure R-l at page 132 of the Paper Book. Recommendations appearing at page 103 of the Report are reproduced below :-- Passenger and Goods Taxes : 4-4-8 For goods and passenger taxes the position varies widely. Goods tax is not levied in Tamil Nadu, West Bengal and Sikkim. The quantam of goods tax in States where it is levied is either a percentage of freight or a lump sum amount, and it is either collected separately or compounded with motor vehicles Tax. The existing wide disparities encourage operators to register commercial vehicles in the States where tax is either lower or non-existent to the detriment of other States. Similarly, for passenger taxes the tax rate differs in States. In some states it is a percentage of and in others a fixed charge on fare. Again it is either collected separately or along with motor vehicles tax. The rate of passenger tax varies from 10 to 35 percent of fare in States where it is levied separately and not compounded with motor vehicles tax. Generally, this tax is collected on vehicle basis. Both State transport undertakings and private operators have complained that they have to spend considerable time and efforts in satisfying the authorities about revenues collected from fares for calculating their liability for passenger tax. In view of these complaints, we suggest that in those States where goods and passenger taxes are levied separately, these should be consolidated with motor vehicles tax and collected as a lump sum on an annual, quarterly or even monthly basis as in southern States. Such a step would not only improve tax collection but also reduce inconvenience to operators. Goods and passenger taxes levied by the railways are collected on a consolidated basis and shared with State Governments. We recommend a single agency in each State for collection of motor vehicles and passenger and goods taxes as in Uttar Pradesh and Kerla. 8. The State Cabinet approved the draft of Madhya Pradesh Karadhan Vidheyak, 1991. The said bill was passed into an act on 31-7-1991 (Bill No. 17/91). We recommend a single agency in each State for collection of motor vehicles and passenger and goods taxes as in Uttar Pradesh and Kerla. 8. The State Cabinet approved the draft of Madhya Pradesh Karadhan Vidheyak, 1991. The said bill was passed into an act on 31-7-1991 (Bill No. 17/91). The Bill No. 17/91 was given assent by the President of India on 21-9-1991, which was published in the Madhya Pradesh Gazette, The Bill No. 17/91 became law being Act No. 25/91. An amendment to the Act No. 25/91 was made by an amending Act No. 26/91 (passed by Vidhan Sabha by Bill No. 30/91). The Bill No. 30/91 received the Assent of Governor of Madhya Pradesh on 24-12-1991 being Madhya Pradesh Motoryan Karadhan (Sanshodhan) Adhiniyam Act No. 26/91. The two Acts i. e. Nos. 25-91 and 26/91 were brought into force on its publication in official Gazette on 27th December, 1991. By Section 26 of the Act, the Madhya Pradesh Motor Vehicles Taxation Act. 1947 (No. VI of 1947) and the Madhya Pradesh Motor Vehicles (Taxation of Goods) Act, 1962 (Act No. 19/62) were repealed. 9. We may now refer to the statement of objects and reasons : Statement of objects end reasons of Act No. 25 of 1991 Motor Vehicle tax is levied under the Madhya Pradesh Motor Vehicles Taxation Act, 1947, on all vehicles used or kept for use in Madhya Pradesh. In addition, "additional tax" is levied on passenger vehicles under separate provisions of the said Act. Under the Madhya Pradesh Motor Vehicles (Taxation of Goods) Act, 1962, goods tax is levied on goods carriages. 2. With a view of rationalising and simplifying taxation on motor vehicles, the following objects are sought to be achieved through this Bill :-- (i) Multiplicity of taxes on motor vehicles viz. "motor vehicle tax", "goods tax" and "additional tax" is being abolished by integrating all leviable taxes under the head "motor vehicle tax". (ii) Tax rates for different categories of vehicles have been rationalised and rounded off to make calculation of tax amount and its payment simpler. (iii) Certain new classess of vehicles and as private service vehicles, educational institution buses have been introduced in the Motor Vehicles Act, 1988. The present Taxation Act does not provide tax rates for such classess of vehicles. The proposed Bill provides for separate tax rates for these new classess of vehicles. (iii) Certain new classess of vehicles and as private service vehicles, educational institution buses have been introduced in the Motor Vehicles Act, 1988. The present Taxation Act does not provide tax rates for such classess of vehicles. The proposed Bill provides for separate tax rates for these new classess of vehicles. (iv) The population of non-transport vehicles such a motor cycles, scooters, cars etc. is 80% of the total registered vehicles in the State and 'heir owners have to repeatedly visit the Regional Transport offices to deposit tax and get registration papers undated. States adjoining Madhya Pradesh, namely Maharashtra, Gujarat, Rajasthan, Andhra Pradesh, Uttar Pradesh as also in the Union Territory of Delhi have introduced compulsory life time tax on motor cycles, scooters, cars etc. Following the tax system of these States, a compulsory life lime tax is being proposed On non-transport vehicles. At present payment of life time tax is optional under the Madhya Pradesh Motor Vehicles Taxation Act, 1947. The proposed compulsory arrangement will, in addition to giving facility to the owner of Motor Vehicles, reduce the work load of the Regional Transport Officers. (v) With a view to curbing the tendency to evade the payment of tax on motor vehicles, suitable provisions have been incorporated in the Bill for the payment of tax in advance subsequently and for appropriate refunds for periods of non-use. Statement of objects and reasons of Act No. 26 of 1991.-The Madhya Pradesh Motor Vehicles Taxation Act, 1991, provides for the amalgamation and rationalisation of various taxes leviable on motor vehicles in the State. The State Government received representations from the various Associations of Motor Vehicles owners with regard to provisions pertaining to taxation of public service vehicle. After careful consideration of the representations received, it has been decided to amend the aforesaid Act suitably. 2. The salient features of the Bill are as follows :-- (i) The provisions pertaining to the collection of tax from public service vehicles on quarterly advance basis are proposed to be changed to monthly advance basis. (ii) A new proviso is proposed to be added in Section 14 to provide for the refund of tax paid in cases where it has not been possible to ply a bus for reasons beyond the control of the Owner of the public service vehicle. (ii) A new proviso is proposed to be added in Section 14 to provide for the refund of tax paid in cases where it has not been possible to ply a bus for reasons beyond the control of the Owner of the public service vehicle. (iii) Separate rates of tax are proposed to be provided for express service buses and air-conditioned/deluxe service buses. Similarly. rates of tax have also been proposed for the public service vehicles of other States plying in Madhya Pradesh. Neither the Bill No. 30/91 nor the Act No. 26/91, by which the amendments were made to Act No.25/91, were sent for approval or assent of the President of India. 10. The reading of the statement of objects discloses three reasons for enacting the law :-- (i) Abolition of "Goods Tax" and Additional Tax and levy of unified motor vehicles Tax; (ii) Prevention of evasion of tax; (iii) Rationalisation of rate of tax for the convenience of the owner of the motor vehicle. 11. The enactment is the subject-matter of challenge as violative of Articles 301 and 304 (b) of the Constitution of India, that it is arbitrary and confiscatory and cannot be termed as a law, regulatory and compensatory. It is also alleged that law cannot be said to be one falling under Entry 56 & Entry 57 of List II Seventh Schedule of the Constitution of India as a consolidating Act or as unified tax and also on the ground of lack of assent of President of India to Act No. 26/91,--the amending Act and being violative on principles of equity, fair play & violative of Fundamental Right under Article 19 (1) (g) as also being unworkable and totally destorying the right of operators lacking in reasonable procedure in respect of charge, assessment, collection of tax not based on the actual use of the vehicle, but by deeming it as kept for use. Further it has been stated that the Right of Appeal is illusory, as there is no provision for assessment or hearing and an unreasonable condition of depositing tax. Further attack is on the ground of discrimination, between the same class of operator and vehicles and between intra-statal and in ex-statal operators. Further it has been stated that the Right of Appeal is illusory, as there is no provision for assessment or hearing and an unreasonable condition of depositing tax. Further attack is on the ground of discrimination, between the same class of operator and vehicles and between intra-statal and in ex-statal operators. While outside operators have a distinct advantage, the local operators suffer, as the unit for taxation is arbitrarily fixed capacity of vehicles i.e. full complement whether actually the seats are occupied or not. More so, the tax instead of being rationalised works great hardship, as it has to be paid in advance and procedure for refund is cumbersome and unreasonable and unrealistic. The requirements laid down are beyond the authority conferred under the Act. 12. It is stated that the enactment does not and cannot acheive its object as one of the operators i.e. MP S.R.T.C. is treated with favour and the huge arrears which are still to be paid by the M.P.S.R.T.C. does not support the claim of the State that it was enacted with a view to reduce tax arrears and evasion of tax It is also stated that State has not revised the fare though the tax has been increased there being no right to pass over the burden as in earlier acts, the levy is in fact confiscatory. It was also stated that the earnings from tax are more but there is no or little expenditure towards the maintenance of roads. Since the operators are suffering huge lossess on account of excessive tax burden, the levy is nothing but confiscatory. 13. We have heard Shri G. M. Chaphekar, Shri V. S. Dabir, Shri B. K. Rawat, Shri Ravindra Shrivastava and Shri Kohli on behalf of the petitioners at length and Shri N. C. Jain Advocate General and Shri S. L. Saxena, Additional Advocate General, supplemented by Shri Shivraj Singh, Transport Commissioner On certain details in budgetory provisions. 14. The challenge to the Act may be broadly classified in different heads as under : (i) Legislative competence under List II Entry 56 & 57 of the VIIth Schedule of the Constitution and want of assent by the President of India to Act No. 26/91. (ii) Whether the tax imposed is neither regulatory nor compensatory as such violative of Art. 301 of the Constitution. (ii) Whether the tax imposed is neither regulatory nor compensatory as such violative of Art. 301 of the Constitution. (iii) Whether the provisions of the M. P. Motor Yan Karadhan Adhiniyam, 1991 & Rules framed there under are arbitrary and discriminatory under Article 14 of the Constitution ? (iv) Whether the tax imposed is confinscatory in nature and violative of Article 19 (1) (G) of the Constitution ? (v) Other grounds of challenge. Grouad No. 1 15. We may now take up the challenge No. 1 i.e. legislative competence of the State Legislature to frame a law under List II-Entry 56/57 of the VIIth Schedule of the Constitution of India. The Two entires read thus :-- 56. Taxes on goods and passengers carried by road or on inland waterways. Tax on Goods and Passengers. If the tax is on goods or passengers, it would not be invalid if it is collected through the operators, who had realised it along with the fare. It may be recovered with retrospective effect, unless such retrospective operation of a valid-dating law alters the nature of the original legislation. 57. Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tram cars subject to the provisions of entry 35 of List III. 16. Perusal of the said two entries disclose that the tax imposed by law under entry No. 56 is an indirect tax on goods and passengers carried by road or on inland waterways. The essential feature of the law, therefore, is that the operator or the bus owner is not made liable to pay the tax but the same is recovered from the passengers. In other words, the tax is passed over to the passengers or the goods, whereas under Entry No. 57 the tax is directly on the vehicles, whether mechanically propelled or not, suitable for use on roads subject to the provisions of Entry 35 of List III of the VIIth Schedule. This entry brings within its fold the vehicles suitable for use on roads. Taxes within these entries can be imposed on all sorts of vehicles which can be used on roads. Here there is specific omission regarding tax on goods and passengers. Analysis of the two entries discloses that under entry 56 the intention is to impose tax on persons using the road. Taxes within these entries can be imposed on all sorts of vehicles which can be used on roads. Here there is specific omission regarding tax on goods and passengers. Analysis of the two entries discloses that under entry 56 the intention is to impose tax on persons using the road. Emphasis will have to be given on the phrase "goods and passengers carried by road". The goods and passengers cannot be carried by road except by use of some vehicle on roads. Under entry 57, the phrase "suitable for use on roads" would also mean use of the road by any vehicle. In the earlier entry the taxes are limited on carriages of goods and passengers. Thus, what is said about Entry 57 is true about Entry 56 also. 17. The taxing power under Entry 56 or 57 is regulatory and is compensatory for use of roads. The incidence of tax under Entry 56 is on goods and passengers. Even if the amount of tax is measured by fare or with distance travelled, it is open to the legislature to recover this tax from the owners or operators of the vehicles. Where the tax is payable by passengers and goods carried by stage carriages and other carriages, it is a tax under Entry 56 even though an obligation is placed on the operators to recover it. It may be stated that it is not a tax on income but the operator is entitled to pass over the tax on the passengers or consignor of the goods only if the statute so permits. Under entry 57, since the words "goods and passengers" are missing and the only reference is to the vehicles suitable for use on roads, it can be said that it is the operator and owner alone, who is required to pay the tax and cannot pass over the same to the passengers or goods. Interpreting the entries literally would mean that the two entries cannot be said to be having the same incidence on tax. 18. Question now arises is as to whether there can be a composite law invoking the jurisdiction under the two entries and will such a law be legal and valid ? Interpreting the entries literally would mean that the two entries cannot be said to be having the same incidence on tax. 18. Question now arises is as to whether there can be a composite law invoking the jurisdiction under the two entries and will such a law be legal and valid ? To our mind, there does not appear any prohibition to enact such a law because the State legislature has been conferred power to make law under any of the entries and if the law is made removing the difficulties, it is in order to simplify the procedure for payment of tax in respect of vehicles operated on the roads for any purpose viz. carriage of passengers or goods or any commercial activity. In Federation of Hotel and Restaurant Association v. Union of India (1989) 74 STC 102 it has been held that : (i) Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap. It is the duty of the Courts, however, difficult it may be to ascertain to what degree and to what extent, the authority to deal with matters falling within these classess of subjects exists in each legislature and to define, in the particular case before them, the limits of the respective power. It could not have been the intention that a conflict should exist; and in order to prevent such a result the two provisions must be read together, and the language of one interpretted, and, where necessary modified by that of the other. (ii) The law "with respect" a subject might incidentally "affect" another subject in some way; but what is not the same thing as the law being on the latter subject. There might be overlapping; hut the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects. (iii) It is trite that the true nature and character of the legislation must be determined with reference to the power of the legislature. The consequences and effects of the legislation are not the same thing as the legislative subject matter. It is the true nature and character of the legislation and not its ultimate economic result that matters. 19. (iii) It is trite that the true nature and character of the legislation must be determined with reference to the power of the legislature. The consequences and effects of the legislation are not the same thing as the legislative subject matter. It is the true nature and character of the legislation and not its ultimate economic result that matters. 19. As stated in proposition No. (1), two provisions are to be read together to avoid conflict. In the same way, two provisions in the same list should, therefore, receives construction which will confer the right to legislate rather than to create a conflict: (a) The law under Entries 56 and 57 comprehends within its net all matters with respect to the use of road irrespective of the incidence being on passenger or goods or the operator. See : M/s Sainik Motors v. State of Rajasthan AIR 1961 SC 1480 and Automobile Tr. Raj. o. Stale of Raj. AIR 1962 SC 1406 . : MPJR (2) R 63 Subject of tax is different from the measure of the levy. The measure of the tax is not determinative of its essential character or of the competence of the legislature. (b) Whether it is essential characteristic of tax under the Entry 56 that the incidence of tax should invariably be passed on to the passengers or goods. For instance, under Entry 54 List II whether it is obligatory that the tax should be allowed to be passed on to the purchaser. Language of Entry 54 & Entry 56 & 57 is same. The Supreme Court had occasion to consider the question whether it is obligatory under Entry 54 to make the law valid conditional on making a provision for sellers to collect the tax from purchaser. We may refer to a decision of the Supreme Court in S. Kodar v. State of Kerala 1974) 4 SCC 422. in which it has been held as under : 12. The legal incidence of tax on sale of goods under the Tamil Nadu General Sales Tax, 1959 falls squarely on the dealer. It may be that he can add the tax to the price of the goods sold and thus pass it on to the purchaser. in which it has been held as under : 12. The legal incidence of tax on sale of goods under the Tamil Nadu General Sales Tax, 1959 falls squarely on the dealer. It may be that he can add the tax to the price of the goods sold and thus pass it on to the purchaser. But it is not necessary that the dealer should be enabled to pass on the incidence of the tax on sale to the purchaser in order that it might be a tax on sales of goods. 13. In J. K. Jute Mills Co. v. State of V. P., this Court said although it is true that the sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation, it is not an essential characteristic of the sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the legislature to impose a tax on sales conditional On its making a provision for sellers to collect the tax from the purchasers. 14. In Konduri Buchirajalingam v. State of Hyderabad, this Court said : It is then said that the sales tax is essentially an indirect tax and therefore it cannot be demanded of the appellant without allowing him to recoup himself by collecting the amount of the tax from the persons with whom he deals. This Court has already decided in the case of Tata Iron and Steel Co. Limited v. The Stale of Bihar (1958) 9 STC 267, that in law a sales tax need not be an indirect tax and that a tax can be a sales tax though the primary liability for it is put upon a person without giving him any power to recoup the amount of the tax payable, from any other party. In the instant case, though under the scheme of 1947 Act, the tax was allowed to be passed on till 1978 but that tax has not been so allowed to be passed on by adding it in fare under the impugned Act. In the instant case, though under the scheme of 1947 Act, the tax was allowed to be passed on till 1978 but that tax has not been so allowed to be passed on by adding it in fare under the impugned Act. The Amending Act No. 13/78 has held the field and was never challenged on the ground that the Law made was incompetent for want of competence under the entry. Whether it is a law under Entry 56 or Entry 57, the incidence of tax is same that is the use of the road or vehicle kept for use on road or vehicle is suitable for use on the road. Thus, as held by the Supreme Court, right to pass on tax does not determine the legislative competence to enact a law. The submisions of the learned counsel for petitioners Shri Ravindra Shrivastava thus fails and are rejected. It is held that the legislature was competent to pass a consolidating Act with the aid of the two Entries 56 and 57 of List II, Seventh Schedule of the Constitution of India. 20. In Bolani Ores Ltd. v. State of Orissa (1974) 2 SCC 777 , it has been stated that the liability for payment of tax depends upon the provisions of the respective Acts. In ascertaining the nature of tax imposed, regard must be given to the intention of the legislature in adopting such a levy, its purpose and intention also. Question, therefore, is whether the tax under Entry 56 or 57 is in the nature of compensatory and regulatory. If the vehicle is for use on public road, the operator can be taxed. While interpreting the words the shade of meaning of a word, its different connotations and collocations do not relieve the responsibility to have the ultimate choice by selecting the right meaning. The meaning, which is most apt in the context, colour and diction in which the word is used, should be chosen. Its purpose and its intent have to be taken into consideration while giving full meaning of the expression used under the legislation. 21. The meaning, which is most apt in the context, colour and diction in which the word is used, should be chosen. Its purpose and its intent have to be taken into consideration while giving full meaning of the expression used under the legislation. 21. It may be useful to refer to the decision of the Supreme Court in S. K. Madar v. State of A. P AIR 1972 SC 1804 in respect of an Act which was a codified Act in respect of levy of tax on motor vehicles, being A. P. Motor Vehicles Taxation Act. The Act was upheld holding that the right to make law under Entry 56 or 57 is not questionable. 22. The submission of the learned counsel for the petitioners in this regard was that the M. P. Motoryan Karadhan Adhiniyam, 1991 (Act Nos, 25/91 and 26/91) which makes departure from earlier Acts, cannot be said to be a law which can be supported under entries 56 or 57, because a combined law can not be enacted. Incidence of tax under the two entries is different. When passengers and goods are carried by a vehicle, they should pay for the use of the road. To say that the taxing event being different under Entries 56 and 57, the law made is ultra vires and without legislative competence cannot be accepted. The case relied on for the said purpose i.e. M/s Goodyear India Ltd. v. State of Haryana AIR 1990 SC 781 was a case in respect of purchase tax. In the said judgment, the Supreme Court held that the State of Haryana had no right to levy any tax. Moreover, it also had no legislative competence. The petitioner further submitted that there is no close nexus between the taxing event and the levy. It is also said that assumptions and presumptions are not permissible. The submission of the petitioners was that it was being presumed by the legislature that the operator and the owner of the vehicle are different. There being three different taxes imposed i.e. passenger tax, goods tax and road tax, all the three taxes could not be combined in one and, therefore, there was gross anomaly whereby the legislature was not competent to enact the law bringing together the taxing event in one event. 23. There being three different taxes imposed i.e. passenger tax, goods tax and road tax, all the three taxes could not be combined in one and, therefore, there was gross anomaly whereby the legislature was not competent to enact the law bringing together the taxing event in one event. 23. Having considered the arguments of the learned counsel for the petitioners on this Count, we are of the opinion that the legislature was competent to enact the law imposing tax on the motor vehicles carrying Passengers and goods as also a tax under the Motor Vehicles Taxation Act, as was being levied under the said Act of 1947. There was no impediment in making the law as the legislature was competent to make law under both the entries. It was not a case in which the law would have suffered because it was a subject matter of List I for which the State had no compentence to enact law as was held in the case Goodyear India v. State of Haryana (supra). Thus challenge On this ground is totally misconceived and rejected. 24. Having held that the legislature was competent to enact Act Nos. 25/91 and 26/91 under the entries, whether Act No. 26/91 is invalid for want of assent of the President ? It may be seen that the Amending Act did not change the nature of the tax nor did it make the law more rigorous than the parent law i.e. Act No. 25/91. Act No. 25/91 has received the assent of the President of India. The question of any further assent does not arise. The issue is not resintigra. The Supreme Court has decided that if the Amending Act does not travel beyond the scope of parent Act for which assent was given, there is no invalidity. Sec. 1991(1) SCC 56; also see AIR 1976 SC 1443 and AIR 1977 SC 1686 . Ground No. 2 25. Now we take up the challenge under Article 301 of the Constitution of India. Having held that the Act No. 25/91 and 26/91 are law made under Entry 56 and Entry 57 of List 11, Seventh Schedule and that under both the entries, tax is imposed for use of road or being kept for use or suitable or adopted for use on road, the object of levy is to compensate for use of road. Having held that the Act No. 25/91 and 26/91 are law made under Entry 56 and Entry 57 of List 11, Seventh Schedule and that under both the entries, tax is imposed for use of road or being kept for use or suitable or adopted for use on road, the object of levy is to compensate for use of road. In the very nature of things, the tax is compensatory and in that event, the challenge to validity of the Act under Article 301 of Constitution of India. is misconceived. It is not necessary to refer number of cases for the proposition of law which is well settled. We may refer to International Tourist Corporation v. State of Haryana MANU/SC/0331/1980 : (1981) 2 SCC 318 in which it has been held by the Supreme Court in paragraphs 8 and 9 of its judgment as under: Having regard to Atisbari Tea Co. Ltd. v. State of Assam, Automobile Transport (Rajasthon) Ltd. v. State of Rajasthan and Bolani Ores. Ltd. v. State of Orissa, it has to be held that the power exercisable under Entry 56 of List II is the power to impose taxes which are in the nature of regulatory and compensatory measures. In the last of the cases mentioned, it was said by the Court (SCC. p. 785, para 15), "Entry 57 of List II empowers legislation in respect of taxes on vehicles.....suitable for use on roads.... The power exercisable under Entry 57 is the power to impose taxes which are in the nature of regulatory and compensatory measures" What was said about Entry 57 is true of Entry 56 too. But to say that the nature of a tax is of a compensatory and regulatory nature is not to say that the measure of the tax should be proportionate to the expenditure incurred on the regulation provided and the services rendered. If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee. If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee. What is necessary to uphold a regulatory and compensatory tax is the existence of a specific, identifiable object behind the levy and a nexus between the subject and the object of the levy If the object behind the levy is identifiable and if there is sufficient nexus between the subject and the object of the levy, it is not necessary that the money realised by the levy should be put into a separate fund or that the levy should be proportionate to the expenditure. If any other authority is needed we may refer to State of Maharashtra v. Madhukar Balkrishna. AIR 1883 SC 1005, MANU/SC/0483/1988 : 1988 (4) SCC 290 There is enough material on the record to the fact that all receipts of the tax are spent on construction, maintenance etc. of the roads. The challenge on this Count also must fail. Ground No. 3 26. Now we may take up the challenge on the grounds of Article 14 of the Constitution. The challenges are numerous which are catalogued below:-- (1) That the Act imposes heavy tax burden on one category of vehicles that is Public Service Vehicles alone and not on goods Vehicles, as such, the tax imposed is discriminatory. The argument is that while imposition of levy places heavy burden on the passenger transport vehicles, goods vehicles have not been touched comparatively though similarly situated. (2) That the Motor Vehicles operating intra-State have been placed with a heavy rate of tax, the vehicles coming from outside the State are not similarly taxed. (3) That there is discrimination in respect of same type of Motor Vehicles i. e. Public Service Vehicles--vehicles operating on Reciprocal permits, Non-raciprocal permits, omnibuses, Education buses. (4) That the tax imposed is not in the proportion to the income derived. (5) That the tax is imposed even when the Motor Vehicle is not used on road or merely kept for use. The period of non-use is not taken into consideration and the tax is demanded in advance. (6) That the procedure prescribed for refund of tax is arbitrary and discriminatory and places restrictions which are outside the provisions of the Act and are contrary to the provisions of the Motor Vehicles Act 1988. The period of non-use is not taken into consideration and the tax is demanded in advance. (6) That the procedure prescribed for refund of tax is arbitrary and discriminatory and places restrictions which are outside the provisions of the Act and are contrary to the provisions of the Motor Vehicles Act 1988. (7) That there is no machinary provided for assessment and in absence of such a procedure, the whole scheme of the Act is arbitrary. (8) That the Madhya Pradesh State Road Transport Corporation has been shown special fovour and is not being treated equally with other operators. (9) That the distinction is respect of "Kachha" and "Pakka" route as statutorily recognized has not at all been taken into consideration. (10) That there has not been revision of fare table simultaneously with increase of tax. Though the tax Law is not immune on the ground of attack under Article 14 of the Constitution, the Legislature has wide Latitude. See State of Maharashtra v. Madhukar Balkrishna Badiya MANU/SC/0483/1988 : 1988 4 SCC 290 . in which it has been held in para 14 & 15. Further, though a taxation law cannot claim immunity from the requality clause in Article 14, but in view of the intrinsis complexity of fiscal adjustments of diverse elements, a considerably wide discretion and latitude in the matter of classification for taxation purpose is permissible. The legislature has the power to distribute tax burden in a flexible manner and the Court would not interfere with the same. In the context of commercial regulation, Article 14 is offended only if the classification rests on grounds wholly irrelevant to the achievement of the objective and this lenient standard is further weighted in the State's favour by the fact that a statutory discrimination will not be set aside if a state of facts may reasonably be conceived by the Court to justify it. Tax laws have to respond closely to local needs and Court's familarity with these needs is likely to be limited. Therefore, the Court must be aware of its own remoteness and lack of familiarity with the local problems. Classification is dependent upon peculiar needs and specific difficulties of the community. The needs and the difficulties of a community are constituted out of facts and information beyond the easy ken of the Court. Therefore, the Court must be aware of its own remoteness and lack of familiarity with the local problems. Classification is dependent upon peculiar needs and specific difficulties of the community. The needs and the difficulties of a community are constituted out of facts and information beyond the easy ken of the Court. In Federation of Hotel and Restaurant Association v. Union of India (1989) 74 STC 102. it has been held that: (vi) It is now well-settled that though taxing laws are not outside article 14, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, the legislature enjoys a wide latitude in the matter of selection of persons, subject matter, events, etc., for taxation. The test of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment, what is looked into is not its phraseology, but the real effect of its provisions A legislature does not, as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and informity within each group, the law would not be discriminatory. Decisions of the Supreme Court have permitted the legislature to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. But, with all this latitude, certain irreducible desiderata of equality shall govern classification for differential treatment in taxation laws as well. The classification must be rational and based on some qualities and characteristics which are to be found in all the persons grouped together and absent in the other left out of the class. But this alone is not sufficient. The differentia must have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience. Classification based on differences in the value of articles or the economic superiority of the persons of incidence are well-recognised. A reasonable classification is one which includes all who are similarly situated and none who are not. In order to ascertain whether persons are similarly placed Or persons are similarly placed, one must look beyond the classification and to the purposes of the law. In Malwa Bus Service (Pvt.) Ltd. v. State of Punjab MANU/SC/0263/1983 : AIR 1983 SC 634 it has been held that:-- Even a fiscal legislation is subject to Article 14 of the Constitution. But it is well settled that a legislature in order to tax some need not tax all. It can adopt a reasonable classification of persons and things in imposing tax liabilities. A law of taxation cannot be termed as being discriminatory because different rates of taxation are prescribed in order of different items, providing it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere fact that a tax falls more heavily on certain goods or persons may not result in the invalidity. The levy of different rates of tax on State carriages and public carriers does not suffer from the vice of hostile discrimination. The stage carriages which travel on an average about 260 kilometres every day on a specified route or routes with an almost assured quantum of traffic which unvariably is over crowded belong to a class distinct and separate from public carriers which carry goods on undefined routes. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. The amount of wear and tear caused to the roads by any class of motor vehicles may not always be a determining factor in classifying motor vehicles for purposes of taxation. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. The amount of wear and tear caused to the roads by any class of motor vehicles may not always be a determining factor in classifying motor vehicles for purposes of taxation. Ground No. 1 to 3 : The ground of attack do not stand the test laid down. It is to be remembered that the legislature has wide discretion in matters of selection of objects. The categories of vehicles and classification cannot be said to be arbitrary. Diverse exigencies of fiscal policy determine the diverse factor. We do not find that the rate of tax imposed on the intra State Vehicle is arbitrary. The vehicles Operating from outside the State are a distinct category. The vehicles of the State operating in other States are treated equally under the raciprocal agreement. The various categories of vehicles mentioned in Schedule I item 1V-A to G, V, VI, VII are categorised taking into consideration, the diverse public interest served by it. Thus, grounds of challenge under S. No. 1 to 3 are negatived. Ground No, 4 to 5 : This part of challenge is part of challenge in Ground No. 4-as such no separate discussion made. Challeng No. 6/7 is decided under head. Assessment and appeal separately. Challenge 8, 9, 10, are decided under Ground No. 1, hence no separate discussion is necessary. Ground No. 4 : 27. The fourth ground of challenge is that the tax imposed is confiscatory and violative of Article 19 (1) (g) of the Constitution of India. Mr. Chaphekar, learned counsel for the petitioners submitted that the tax should be in proportion to the income derived. He made references to documents X/6 and Z/12 in this connection. He also made reference to X/11 and X/12 for the submission that the tax demanded is unreasonable, to illustrate he says if the vehicle runs say for a day or a week or a month, the rate of tax is same and has no rationale or relationship with income derived. The payment of tax is grossly disproportionate. As such the tax is confiscatory and violative of Article 19 (1) (g) of the Constitution of India. The payment of tax is grossly disproportionate. As such the tax is confiscatory and violative of Article 19 (1) (g) of the Constitution of India. Other counsels appearing for the petitioners Sarvashri V.S. Dabir, B.K. Rawat, Ravindra Shrivastava submitted that total receipts from tax by the State is very high while the expenditure on road is negligible, they also contended that the tax therefore is neither regulatory nor compensatory but confiscatory. Actual spending on the roads has no nexus with the tax, which is mainly for use of roads. It was also submitted that tax is levied on vehicles which lie idle and not used there can be no tax on non-use, any, levy of tax would therefore be confiscatory, as it is oppressive and operative on the earnings and not on gain or profits derived. The Advocate General, assisted by Mr. Additional Advocate General Mr. Saxena submits that figures of earnings submitted by the petitioners are not real. He made reference to several documents reference to which will be made later on. He also relies on budget estimates for the year 1992-93 and some relevant figures from other States where such a tax has been levied have been placed on record. The arguments under this head are partly relevant for the challenge on the grounds of challenge under Article 301 of the Constitution of India also. (1) Receipts and Expenditure : We may now take up the documents for consideration. The State has filed along with the return R/7 a Statement of Receipts from taxes on Motor Vehicles and expenditure on construction and maintenance of Roads and Bridges etc. The figures are derived from Budget documents. Details are as under:-- Statement showing Receipts from Taxes on Motor Vehicles & Expenditure on Construction & of Roads and Bridges, Regulation of Traffic. Financial year Receipts from taxes on Motor Vehicles Expenditure on Constn. & Maintenance of Roads & Bridges Gross Receipts Deduct Collection Charges Net Receipts P.W.D. Roads Plan non-plan Forest Roads plan non-plan Total Expenditure of Roads & Bridges 1989-90 (Actuals) 105.67 2.90 102.77 78.48 127.54 -- 2.43 208.45 1990-91 (Revised Estimate) 117.00 3.92 113.08 68.69 115.10 -- 2.00 185.79 1991-92 (Original Estimate) 132.00 4.67 127.33 70.14 135.81 -- 2.25 208.20 (Estimates after the New Act) 138.00 4.67 133.33 602.44 Note: 1. Expenditure on roads by Irrigation Departments and Local Bodies and expenditure on traffic police, street lighting etc. Expenditure on roads by Irrigation Departments and Local Bodies and expenditure on traffic police, street lighting etc. is not included in the total expenditure figures above, the same not being readily available. 2. Source--Budget Reports. Sd/- Officer-in-charge of the case It was pointed out by learned Advocate General that there was inadvertent mistake while preparing R/7. He stated that correct figures are given Z/3. We may now refer to the same. Relevant data is quoted below :-- Statement showing Receipts from taxes on motor vehicles and expenditure on construction and maintenance of Roads and Bridges and Regulation of traffic in Madbya Pradesh. Financial Year Receipts from taxes on motor vehicles (Rs. Crores) Expenditure on constn. and maintenance of Roads and Bridges Receipts of Transport Deptt. Receipts of PWD from Toll Tax Deduct Collection charges Net Receipts. PWD Roads Plan Non plan Forest Roads Non-plan Grant to Local Bodies Non-plan Total Expenditure 1989-90 (Actuals) 105.67 7.27 2.90 110.04 78.48 127.54 2.43 3.00 211.45 1990-91 (Actuals) 116.98 9.23 3.44 122.77 55.89 141.31 2.32 8.30 207.82 1991-92 (Revised Estimates) 154.65 11.44 4.98 161.11 66.66 136.01 2.25 7.49 212.41 1992-93 (Budget Estimates) 179.00 16.93 4.82 191.11 78.24 157.93 2.48 10.01 248.66 Note : (1) Expenditure on roads by Irrigation Department and expenditure on traffic police, street lighting etc. is not included in the total expenditure figures shown above, as the same are not separately available. (2) Increase in receipts from Buses alone on account of revision in tax rates is estimated at 11.00 crores per annum. (3) Source of above figures: Budget documents presented in the State Assembly. Sd/- (Officer-in-charge of the case) Thus it will be seen that net receipt for 1992-93 are only 191.11 Crores. While expenditure comes to Rs. 248.66 Crores. To be more exact we may refer to the Budget proposals tendered during the course of arguments by both the sides. Estimates of Receipts : Item 0041 : Heads of Account Account 1990-91 Budget Estimate 1991-92 Revised Estimate 1991-92 Budget Estimate 1992-93 Taxes on Vehicles (101) Receipt under the Indian Motor Vehicles Act. (0762) Tax Collection (102) Receipts under the State Motor Vehicles Taxation Act. 6,87,37 9,44,49 9,99,00 8,99,00 (0067) Tax collection other than under section 3-A. 46,78,60 38,77,17 30,29,00 5,00 (0068) Additional tax under section 3-A. 17,97,04 41,46,47 22,33,00 6,00 (0871) Life time tax under Motor Vehicles Tax. (0762) Tax Collection (102) Receipts under the State Motor Vehicles Taxation Act. 6,87,37 9,44,49 9,99,00 8,99,00 (0067) Tax collection other than under section 3-A. 46,78,60 38,77,17 30,29,00 5,00 (0068) Additional tax under section 3-A. 17,97,04 41,46,47 22,33,00 6,00 (0871) Life time tax under Motor Vehicles Tax. 0 0 8,14,00 30,84,09 (0872) Monthly tax on Passenger vehicles under Motor Vehicles Tax. 0 0 12,31,00 33,18,00 (0873) Quarterly tax on heavy vehicle under Motor Vehicle Tax. 0 0 29,69,00 89,49,00 (0069) Deduct-Refunds 0 -100 0 15,00 Total Minor Heads (102) 64,75,64 80,22,64 1,02,76,00 1,53,47,00 (800) Other Receipts (0761) Miscellaneous 3,31,44 1,62,87 1,65,00 1,75,00 Total Major Head 0041 74,94,4S 91,30,00 1,14,40,00 1,64,21,00 0042 Taxes on Goods and passengers (101) Tax Collections Heads of Account Account 1990-91 Budget Estimate 1991-92 Revised Estimate 1991-92 Budget Estimate 1992-93 (0070) Tax on goods 31,84,36 30,79,00 27,00,00 19,00 (0071) Tax on passengers 14,53 1,00 1,00 4,00 Total Minor Head 101 31,98,89 30,80,00 27,01,00 23,00 102 Toll On Roads (0072) Ordinary Revenue 10,04,52 9.90,00 13,24,00 14,56,00 (106) Tax on entry of goods into local Areas (0643) Entry Tax 1,10,43,31 1,47.00,00 76,00,00 1,50,44,00 Total Major Heads 0042 1,52,46,72 1,87,70,00 1,16,25,00 1,65,23,00 28. Particular reference is made to entries relating to receipts under Section 3-3-A of Motor Vehicles Taxation Act, 1947. In 0042 much emphasis was laid on receipts under sub heads on Goods & Tax on passengers, Tolls and Roads. It may be stated that sub-head 0043 relates to Entry Tax which is not a tax on Motor Vehicles under Motor Vehicles Taxation Act but under Entry Tax Act (in lieu of Octroi). Thus, the receipts are of Rs. 1,65,23,00 crores. Item No. 1054-Road and Bridge, is as under :-- 29. The explanatory note submitted by the State to these figures are as under:-- 1. In Document Annexure Z-3, receipts from Entry Tax and Pathkar have not been included. Further, receipt from G.O.I, for Roads and Bridges (Pages 65,100,101 of the Badget Document) have not been shown in Z-3. 2. "Entry Tax" is not a tax On motor vehicles. It is a tax on goods brought in local area, and not on the vehicle owner. Receipts on account of Entry Tax, have no relevance for the purpose of Z-3. 3. Receipts from Pathkar have been included in Z-3. Receipts from tolls on bridges have also been included in Z-3. 2. "Entry Tax" is not a tax On motor vehicles. It is a tax on goods brought in local area, and not on the vehicle owner. Receipts on account of Entry Tax, have no relevance for the purpose of Z-3. 3. Receipts from Pathkar have been included in Z-3. Receipts from tolls on bridges have also been included in Z-3. To illustrate; for the year 1992-93 :-- Receipts under M. V. Act 1988 & M.P.M.V. Tax Act, 1991 i.e. Total Major head 0041 (pg. 7 of Book) 164.21 Cr. Receipts on account of Arrears of passengers and goods tax (page 7 of Book) 0.23 Or. Receipts on account of tolls On roads (Page 7 of Book. 14.56 Cr. Total 179.00 Cr. Receipts on account of tolls on bridges (Page 98 of Budget Book) 16.93 Cr. As shown in Annexure Z-3. Grant to local bodies shown in Z-3 are the grants under Section 7 of the M. V. Taxation Act out of receipts under the Act. These grants have nothing to do with Entry Tax. 4. The only receipts from G.O.I, for "roads and bridges" are : (i) grant under "Central road fund" (Page 65) 0.77 Cr. (ii) Plan grants for "roads and Bridges (Page 100) 0.30 Cr. (iii) Grants for centrally sponsored schemes under head "roads and bridges" (Page 101) 1.70 Cr. Total 2.77 Cr. These grants are tied grants and are spent for the specified purpose in addition to expenditure shown in Annexure Z-3. Expenditure shown in Annexure Z-3 is the expenditure On roads and bridges from the sources of the State Government, G.O.I. grants, are not therefore, shown either on receipt side or on expenditure side in Z-3. Thus, it will be seen that the receipts are less and expenditure more. The counsel for the petitioners were very critical, the way the documents were filed with the return. We are convinced that this being a technical matter there was a bonafide mistake. We also heard Shri Shivraj Singh Transport Commissioner, on this aspect. In AIR 1983 SC 1005 , it has been held that-- Law is settled that to uphold levy of a tax of this type, what is necessary is existence of a nexus between the subject and the object of the levy and it is not necessary to show that the whole or a substantial part of the tax collected is utilised. We are, therefore, satisfied that the demand of tax is not open to challenge and the plea raised against the levy, whether of tax or additional tax, is not justified. The tax is essentially compensatory and regulatory. Thus, not violative of Article 301 of the Constitution of India. Whether it is confiscatory under Article 19 (1) (g) of the Constitution is dealt in later part of the order. 30. Now we may take up the challenge on the ground that the tax demanded is disproportionate to the earnings. It is necessary to refer some data placed on the record. Prima facie evidence collected shows that even though the profits may have been reduced but the tax burden cannot be said to be excessive or confiscatory. The data collected relates to State along with other States where such a unified tax is levied. It is true that increase of tax under the present act is nearly twice i.e. it was 1.406 as on 7-2-1991 to 3.86 as on 1-1-1992, See R/13, whereas earnings between the two periods are Rs. 12442 to Rs. 10605. Question is whether the reduction of earning proportionate to the enhancement can be said to be vary high. While R/13 is in respect of coverage of 50 KM, R/14 deals with coverage of 100 KM, a perusal of last column shows a marginal difference but earnings in longer routes are more. Reference has been made to tax burden on coverage of distance in kilometres. A comparative statement of tax and earning on full capacity of bus (50 seater) on coverage of 50 KM distance and 100 KM distance in different states is given in Z/7 and Z-8. Statement showing the Net Earnings (after providing for the payment of tax) of a Stage Carriage Operator of a 50 Seater Bus plying 50 Kms. a day in the States of Andhra Pradesh, Karnataka, Rajasthan and Madhya Pradesh; where the entire tax burden is to be borne by the vehicle owner on the basis Of seating capacity of the vehicle. S. No. Name of State Fare (paise per seat per Km.) Tax payable (Paise per seat per K. M.) Net earning per seat per Km. (Paise) Net earning of Bus for 50 Kms. day. (Rs.) Net earning per month Rs. Road Tax+ Goods Tax Addl. Tax Total/ Unified Tax 1. Andhra Pradesh (on 1-1-92) 13 2.82 10.18 254.50 7635 2. S. No. Name of State Fare (paise per seat per Km.) Tax payable (Paise per seat per K. M.) Net earning per seat per Km. (Paise) Net earning of Bus for 50 Kms. day. (Rs.) Net earning per month Rs. Road Tax+ Goods Tax Addl. Tax Total/ Unified Tax 1. Andhra Pradesh (on 1-1-92) 13 2.82 10.18 254.50 7635 2. Karnataka (on 1-1-92) 18 6.66 11.34 283.50 8505 3. Rajasthan (on 1-1-92) 17 .004 1.8 1.804 15.196 380 11397 4. Madhya Pradesh on 1-1-91 12.5 .006 1.4 1.406 11.09 277.35 8320 on 7-2-91 .006 1.4 1.406 16.59 414.75 12442 on 1-1-92 18 .._ 3.86 11.14 353.50 10605 Source : Fare notifications and Tax schedules of concerned States. Officer-in-Charge of the caseStatement showing the Net Earnings (after providing for the payment of tax) of a stage carriage operator of a 50 seater Bus plying 100 Kms. a day in the States of Andhra Pradesh, Karnataka, Rajasthan and Madhya Pradesh; where the entire tax burden is to be borne by the vehicle owner on the basis of seating capacity. S. No Name of State Fare (Paise per seat per Km.) Tax payable (Paise per seat per Kms.) Road Addl. Total/ Tax Tax Unified Goods Tax Tax. Net earning per seat per Km. (Paise) Net earning of bus for 100 Kms./day. (Rs.) Net earning per month Rs. 1. Andhra Pradesh (on 1-1-92) 13 1.41 11.59 579.50 17385 2. Karnataka (on 1-1-92) 18 3.33 14.67 733.50 22005 3. Rajasthan (on 1-1-92) 17 .111 1.8 1.91 15.09 754.50 22635 4. Madhya Pradesh on 1-1-91 12.5 .146 1.4 1.54 10.96 548 16440 on 7-2-91 18 .146 1.4 1.54 16.46 823 24699 on 1-1-92 18 2.33 15.67 783.5 23505 Source : Fare Notifications and Tax schedules of concerned States. Officer-in-Charge of the case. Comparative Chart showing the amount of tax payable per month by 50 seater Stage Carriage in Madhya Pradesh. Distance covered in in a day Tax payable on 1-1-91 (in Rs.) Tax payable on 7-6-91 @ 2paise/km. as per cabinet decision on dated 28-1-91 Road Goods Addl. Total Tax TaxTax Computations of tax @ 2 paise per km. after providing for revised sp re bus tax levied w. e. from 1-1-92 Tax of Tax Total spare pay-Bus able 2 paise Unified tax payable on 1-1-92 under the New Act (in Rs.) Road Tax Goods Tax Add. as per cabinet decision on dated 28-1-91 Road Goods Addl. Total Tax TaxTax Computations of tax @ 2 paise per km. after providing for revised sp re bus tax levied w. e. from 1-1-92 Tax of Tax Total spare pay-Bus able 2 paise Unified tax payable on 1-1-92 under the New Act (in Rs.) Road Tax Goods Tax Add. Tax Total A further reference may also be made to Annexure R-15 1 2 3 4 5 6 7 8 9 10 11 12 13 50 Kms. Tax Total A further reference may also be made to Annexure R-15 1 2 3 4 5 6 7 8 9 10 11 12 13 50 Kms. 52 " 58 " 60 " 62 " 68 " 70 " 72 " 78 " 80 " 82 " 415 415 415 415 415 415 415 415 415 415 415 24 24 24 24 24 24 24 24 24 24 24 1068 1110 1238 1281 1324 1452 1495 1537 1665 1708 1751 1507 1549 1677 1720 1763 1891 1934 2104 2147 2190 415 415 415 415 415 415 415 415 415 415 415 24 24 24 24 24 24 24 24 24 24 24 1525 1586 1769 1830 1891 2074 2135 2196 2379 2440 2501 1964 2025 2208 2269 2330 2513 2574 2635 2818 2879 2940 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 1500 1560 1740 1800 1860 2040 2100 2160 2340 2400 2460 3500 3560 3740 3800 3860 4040 4100 4160 4340 4400 4460 2900 2900 2900 2900 2900 2900 2900 2900 2900 2900 3200 1 2 3 4 5 6 7 8 9 10 11 12 13 88 " 415 24 1879 2318 415 24 2684 3123 2000 2640 4640 3200 90 " 415 24 1922 2361 415 24 2745 3184 2000 2700 4700 3200 92 " 415 24 1964 2403 415 24 2806 3245 2000 2740 4740 3500 98 " 415 24 2092 2531 415 24 2989 3428 2000 2940 4940 3500 100 " 415 24 2135 2574 415 24 3050 3489 2000 3000 5000 3500 110 " 415 24 2349 2788 415 24 3355 3794 2000 3300 5300 3800 120 " 415 24 2562 3001 415 24 3660 4099 2000 3600 5600 4100 130 " 415 24 2776 3215 415 24 3965 4404 2000 3900 5900 4400 140 " 415 24 2989 3428 415 24 4270 4709 2000 4200 6200 4700 150 " 415 24 3203 3642 415 24 4575 5014 2000 4500 6500 5000 200 " 415 24 4270 4709 415 24 6100 6539 2000 6000 8000 6500 300 " 415 24 6405 6844 415 24 9150 9589 2000 9000 11000 9500 400 " 415 24 8400 8839 415 24 12200 12639 2000 12000 14000 12500 500 " 415 24 10500 10939 415 24 15250 15689 2000 15000 17000 15500 600 " 415 24 12600 13039 415 24 18300 18739 2000 18000 20000 18500 700 " 415 24 14700 15139 415 24 21350 21789 2000 21000 23000 21500 Source :-- Tax schedules of M. P. State Taxation Acts. Officer-in-charge of the case. Statement showing the net earning (after providing for the payment of tax) of a stage carriage operator of a 50 seater by plying 1 SO Kms. a day in the States of Andhra Pradesh, Karnataka, Rajasthan and Madhya Pradesh; where the entire tax burden is borne by the vehicle owner on the basis of full seating capacity. S. No. Name of State Fare (Paise per seat per km.) Average earning per seat per km. @ 70% occupancy Tax--payable paise/seat/km. Net earning per seat km/paise Net earning of bus for 50 km per day (Rs.) Net earning per month (Rs.) Road tax & goods tax Add. tax Total unified tax 1. Andhra Pradesh (on 1-1-92) 13.0 09.10 02.82 06.28 157.00 4710 2. Karnataka (on 1-1-92) 18.0 12.60 06.66 05.94 148.50 4455 3. Rajasthan (on 1-1-92) 17.0 11.90 046 01.80 02.26' 09.64 241.00 7230 4. Madhya Pradesh on 1-1-91 12.5 8.75 0.52 01.40 01.92 06.83 170.75 5122 on 7-2-91 18.0 12.60 0.52 01.40 01.92 10.68 267.00 8010 on 1-1-92 18.0 12.60 03.86 08.74 218.50 6555 Source : Fare notifications and tax schedules of respective States. Officer-in-charge of the case. Statement showing the net earning (after providing for the payment of Tax) of a stage carriage operator of a SO seater by plying 100 Kms. a day in the States of Andhra Pradesh, Karnataka, Rajasthan and Madhya Pradesh; where the entire tax burden is borne by the vehicle owner on the basis of full seating capacity. S, No. Name of State Fare (paise per seat per km) Average earning per seat per km. @ 70% occupancy. Road tax& goods tax Tax payable (paise/seat/km. Net earning per seat km. (paise) Net earning of bus for 100 km. pet day. (Rs.) Net earning per month Rs. Add. tax Total/ unified tax 1. Andhra Pradesh (on 1-1-92) 13.0 9.10 1 41 7.69 384.50 11535/- 2. Karnataka (on 1-1-92) 18.0 12.60 3.33 9.27 463.50 13905/- 3. Rajasthan (on 1-1-92) 17.0 11.90 0.23 1.80 2.03 9.87 493.50 14805/- 4. Madhya Pradesh on 1-1-91 12.5 8.75 0.26 1.40 1.66 7.09 354.50 10635/- on 7-2-91 18.0 12.60 0.26 1.40 1.66 10.94 547.00 16410/- on 1-1-92 18.0 12.60 .... 2.33 10.27 513.50 15405/- Source : Fare notifications and tax schedules of concerned States. Officer-in-charge of the case. Rajasthan (on 1-1-92) 17.0 11.90 0.23 1.80 2.03 9.87 493.50 14805/- 4. Madhya Pradesh on 1-1-91 12.5 8.75 0.26 1.40 1.66 7.09 354.50 10635/- on 7-2-91 18.0 12.60 0.26 1.40 1.66 10.94 547.00 16410/- on 1-1-92 18.0 12.60 .... 2.33 10.27 513.50 15405/- Source : Fare notifications and tax schedules of concerned States. Officer-in-charge of the case. The figures given in Annexure X/10 are not correct inasmuch as number of items have been included which have no bearing on tax and earnings, as such, the documents cannot be accepted. A reference to the documents in relation to S.S.M.T. and Choudhary Transport referred to above i. e. Annexure X/l and Annexure X/2 just show a contrary view of the matter. The so called loss estimated is unreal. We may refer to Annexure X/l a statement showing earnings of Sindhi Sahiti Multi Purpose and Transport, Co-operative Society Ltd., Bhopal between January, 1991 to December, 1991 and Annexure X/2 by Choudhary Transport Service, Jabalpur. The statement in Annexure X/l and Annexure X/2 showing earnings are given below :-- S. No. Route Trips S/C Fare per Day Days Maximum collection @ 100/-% Actual Receipt 1. Deori/Bhopal One RT Daily 50 3400.00 365 12,41,000/- 7.28.078/- 2. Sehore/Nasrullaganj One RT Daily 50 1700.00 365 6,20,500/- 5,06,390/- 3. Nasrullaganj/Sehore One RT Daily 50 1700.00 365 6,20,500/- 3 86.164/- 4. Obedulaganj/Nasrullaganj One RT Daily 50 1100.00 181 1,99,100/- 2,63,630/- 5. Bhopal/Nasrullaganj One RT Daily 50 1700.00 184 3,12,800/- 2,34,558/- 6. Obedullaganj/Udaipura One RT Daily 50 1135.00 181 2,05,435/- 2,06,329/- 7. Bnopal/Udaipura One RT Daily 50 1425.00 184 2,64,040/- 2,12,229/- 8. Bhopal/Agar One RT Daily 50 3650.00 365 13,32,250/- 12,55,510/- 9. Vidisha/Bhopal One RT Daily 50 1050.00 365 3,83,250/- 2,15,256/- 10. Bhopal/Jabalpur One RT Daily 50 3000 00 365 10,95,000/- 8,30,789/- 11. Sehore/Bhopal One RT Daily 50 1250.00 365 4,56,250/- 2,85,721/- 12. Bamori/Bhopal One RT Daily 50 3000.00 365 10,95,000/-78,25, 1257- 3,79,815/-55,04,469/- Note: Actual Receipts as accepted and audited by Co-operative Deptt. of State Govt. Receipts are 70% in a year. Sindhi Sahiti Multi Purpose & Transport, Co-operative Society Ltd. Secretary Choudhary Transport Service, Jabalpur 1-1-91 to 31-12-91 S.No Route Trips Kms S/C 100% fare per day Day 100% rate collection Actual collection. 1. Maharajpur-Jabalpur 1 RTD 228 Kms. 50 2050.00 seats 633 7,44,150.00 3,39,190.00 2. Damon-Jhalone 1 RTD 146 Kms. 50 1300.00 seats 360 4,68,000.00 2,06,091.00 3. Sindhi Sahiti Multi Purpose & Transport, Co-operative Society Ltd. Secretary Choudhary Transport Service, Jabalpur 1-1-91 to 31-12-91 S.No Route Trips Kms S/C 100% fare per day Day 100% rate collection Actual collection. 1. Maharajpur-Jabalpur 1 RTD 228 Kms. 50 2050.00 seats 633 7,44,150.00 3,39,190.00 2. Damon-Jhalone 1 RTD 146 Kms. 50 1300.00 seats 360 4,68,000.00 2,06,091.00 3. Damoh-Jabalpur 1 RTD 208 Kms 50 1950.00 seats 363 7,07,850.00 5,16,698.00 19,20,000.00 10,61,979.00 Total Collection is 55% 55% Approx. For Choudhary Transport Service. The occupancy ratio in respect of M.P.S.R.T.G. is given in X-4 Statement showing the physical performance of Madhya Pradesh State Transport Corporation for three years upto 1987-88. S.No. Particulars 1985-86 1986-87 1987-88 14. Occupancy ratio 61.87 63.36 67.55 Occupancy ratio represents total seat Kms. occupied out of total Kms. offered expressed in percentage. Thus the earnings and profits earned are not so grossly affected to term it as confiscatory in nature offending Article 19 (1) (G) of the Constitution of India. However we may refer to Annexure X-10. 31. It has been held by the Supreme Court in 1991 (2) SCC 154 that ability to pay is no consideration in matters of taxation. It is also held in 1990 (3) SCC 645 that the taxes may be oppressive, unjust and even unnecessary but that can constitute no cause for interference nor the Courts can review the expendiency of tax. It is to be noted that the subject of tax is always different from measure of tax 1989(3) SCC 634 . Having given our consideration to different aspects of the arguments, we find that the tax is not confiscatory in nature. 32. We may reiterate that the statement made by executive do not change the law.. Law is to be interpreted as it is, and we find that whatever the implementing agency thinks about the tax leviable on motor vehicles owned and operated by M. P. State Road Transport Corporation, it has to pay same rate of tax as other operators and if less payment has been made authority should implement the law and recover arrears of tax as per Law. (V) Other Grounds of Challenge : 33. Now we may refer to the provisions of the M.P. Motoryan Karadhan Adhiniyam, 1991 i. e. the Act : 3. (V) Other Grounds of Challenge : 33. Now we may refer to the provisions of the M.P. Motoryan Karadhan Adhiniyam, 1991 i. e. the Act : 3. Levy of tax on Motor Vehicles.-- (1) A tax shall be levied on every motor vehicle used or kept for use in the State at the rate specified in the First Schedule : Provided that in the case of motor cycles with or without attachment, invalid carriage and motor cars, the tax shall be levied at the rates specified in the Second Schedule: Provided further that in respect of a motor vehicle passing through the State from a manufacturer to a dealer under a temporary certificate of registration for a period not exceeding one month, the rate of tax shall be One third of the tax payable for a quarter. (2) A Transport vehicle of which the certificate of registration is current, shall, for the purposes of this Act, be presumed to have been in use or kept for use, notwithstanding the expiry of the certificate of fitness in case of such transport vehicle. 5. Payment of tax:--(1) The tax levied under this Act shall be paid in advance by the owner of the motor vehicle, at his choice, quarterly, half-yearly or annually on a token to be obtained by him for that quarter, half-year or year, within fifteen days from the commencement of the quarter, half year or year, as the case may be. Tax for a half-yearly token shall not exceed twice and tax for an annual token shall not exceed four times the tax for a quarterly token: Provided that the tax shall be paid in respect of a motor vehicle used or kept for use for any period expiring on the last day of a quarter and not exceeding two months, at two thirds of the quarterly tax or one-third of such tax according to the period exceeds Or does not exceed one month: Provided further that whenever the rates of tax specified in the First Schedule are enhanced and the owner of a motor vehicle becomes liable to pay the tax at the enhanced rate, then such owner shall deposit the difference of tax at the time of payment of tax for the subsequent period in respect of that motor vehicle. Provided also that the tax levied in respect of a stage carriage plying on a route other than a city route Or a contract carriage other than a motor cab shall be paid in advance monthly, quarterly, half-yearly or annually within ten days from the beginning of the month, quarter, half-year or year, as the case may be. (2) Notwithstanding anything contained in sub-section (1). the tax levied under the first proviso to sub-section (1) of Section 3 shall be for the life time of the motorcycle and shall be paid in advance in lump-sum by the Owner: Provided that,-- (i) in case of a motor vehicle, specified in the first proviso to sub-section (1) of Section 3 registered in Madhya Pradesh, the total amount of tax paid prior to the commencement of this Act shall be deducted from the amount of life-time specified in the Second Schedule; (ii) in case of a motor vehicle specified in first proviso to subsection (1) of Section 3 registered in any other State and brought into the State of Madhya Pradesh, an amount of tax. that ought to have been paid under First Schedule had the vehicle been originally registered and used in Madhya Pradesh, till the date of payment of life-time tax, shall be deducted from the amount of life-time tax specified in the Second Schedule. The owner of such vehicle shall furnish "No Dues Certificate" issued by the Taxation Authority of that State: (2) The application referred to in sub-rule (1) shall be accompanied by a cash receipt of rupees ten to be deposited in the Office of the Taxation Authority, and shall be presented by the permit holder or his duly authorised agent to the Taxation Authority. (3) The permit holder shall, along with the intimation of non-use of permit, deposit, the following documents,-- (i) the certificate of tax, and (ii) a 'no objection certificate' from the permit granting Authority in case of (a) and (b) of sub-rule (1), or (iii) certified copy of the order in case of (c) of sub-rule (1). 34. The specific challenge made to the provisions of the Statute mainly revolve round Section 3 and the Schedule I to the Act. A perusel of Section 3 discloses that the tax is levied on every motor vehicle used or kept for use in the State at the rate specified in the first Schedule. 34. The specific challenge made to the provisions of the Statute mainly revolve round Section 3 and the Schedule I to the Act. A perusel of Section 3 discloses that the tax is levied on every motor vehicle used or kept for use in the State at the rate specified in the first Schedule. No challenge is directed against the proviso to Section 3(1). Section 3(2) has been challenged whereby a deeming fiction is created in respect of motor vehicle of which certificate of registration is current presumed to have been in use or kept for use notwithstanding the expiry of fitness in case of a Transport Vehicle. The challenge based on the ground that the measure of tax is unreasonable being fixed at full complement of bus and on minimum milage is arbitrary. The challenge is alleged to be against the specific provisions of the Motor Vehicle Act, 1988. Reference was made to Section 39, 56, 59 and 60 of the Act. It was argued that the Transport Vehicle cannot be plied except on a permit, even though the registration may be there. The deeming fiction created is arbitrary and against the specific provisions of lb: Central Act. It may be stated that in a taxing statute, a fiction may be created for purposes of the Act as long as it has a nexus with the object of taxation. The Act No. 25/91 has received the assent of the President of India. As such, the fiction as created will prevail over the Central Act i.e. the Motor Vehicles Act, 1988. Validity of Section 14 of the Act was challenged as being arbitrary on the ground that even though the vehicles may not have been used but before claiming any refund for non use, the tax had to be paid in advance and information to be given before commencement of non-use. It was said that it was neither practical nor conducive to do so. It was also alleged that the requirements prescribed under rules i e.-Rules 11 and 14 were in excess of authority conferred by Section 14 of the Act Prescriptions made are for facilitating refund and are not cumbersome. The rules are made for effective implementation of the provisions and are made to effectuate the purposes of the Act i.e. checking Or preventing evasion of tax. The rules are made for effective implementation of the provisions and are made to effectuate the purposes of the Act i.e. checking Or preventing evasion of tax. Moreover, under sub-section 3, refund applied for, not decided within a month, carries interest. Section 16 of the Act is challenged on the ground that there is no provision made for hearing. The section confers arbitrary power on tax authorities. Power of search and seizure is also for compliance with the provisions of the Act and not arbitrary. The section confers limited jurisdiction i.e. to verify whether the provisions of the Act and Rules are complied. Breach of the provisions by authorities may be a non-compliance of the Act but the validity of the Act cannot be challenged on that ground. It was alleged that the Motor Vehicle seized will be visited with a demand at the rate of Rs. 600/-per month under the Schedule I of Clause iv) (G). It is only when the vehicle is found, on verification, to be plying without permit. Under the Motor Vehicles Act, the permit should always be found in the vehicle. Thus, prima facie, plying without permit will meet the consequences for it. It is alleged that the provision was in the nature of penalty and as such, there should be hearing before imposing the penalty. It was alleged that penal provisions in all taxing statutes are construed in a way that there should be compliance with the principles of natural justice i.e. there should be hearing given before imposing penalty. The argument prima facie appears to be sound. It will be dealt with while dealing with the question of challenge in respect of assessment, quantification and appeal. It was also stated that Form 'K' and 'T prescribed are also invalid. The argument deserves to be rejected for same reasons, as applicable to Rules 11 to 14. A very forceful argument was advanced by Mr. Dabir that while the act is said to have been enacted to check evasion of tax but he says, the M. P. S. R. T. C. has been given freedom not to pay tax and unduly heavy concession that even if tax payable is higher, accepted at the rate of Rs. 40/-, total Rs. 2000/- for 50 seats, thereby encouraging evasion of tax while private operators have been selected to foot the bill. 40/-, total Rs. 2000/- for 50 seats, thereby encouraging evasion of tax while private operators have been selected to foot the bill. Reference was made to documents Z-4, Z-5, Z-6 and it was also said that this payment is irrespective of milage covered. It is also stated that no temporary permit can be granted under section 68 (F) ID of the Motor Vehicles Act without advance payment of tax. As such the allegations of evasion of tax by operators are prima facie not acceptable. True it is that no temporary permits are granted without payment of tax. It is always necessary to make provisions to check evasion of tax and many times, penalty for evasion is heavy and it is the mechanism to check tax evasion. Rule 5 of Madhya Pradesh Motoryan Karadhan Rules, 1991, reads as under:'-- 5. Filing of declaration.-- (1) The declaration required under sub-section (1) of Section 8 of the Act shall be in Form 'A', Form 'B' or Form 'C', as the case may be, and shall contain particulars stated therein. (2) The declaration together with crossed bank draft, paid up treasury challan marked original or cash receipt evidencing the payment of tax due shall be delivered to the Taxation Authority either in person by the owner or through an agent duly authorised by him in this behalf, not later than fifteen days after the commencement of the quarter, half year or year, as the case may be; Provided that the declaration in respect of stage carriage playing on a route other than a city route or a contract carriage other than a motor cab shall be delivered not later than ten days after the commencement of the month, quarter, half year or year, as the case may be; Provided further that the declaration in respect of a motor vehicle due for registration in the State shall be delivered at the time of its registration. (3) If the owner of a motor vehicle wishes to change the place for obtaining the token, he shall file a declaration in duplicate in Form 'D' before the Taxation Authority where he is regularly paying tax. (3) If the owner of a motor vehicle wishes to change the place for obtaining the token, he shall file a declaration in duplicate in Form 'D' before the Taxation Authority where he is regularly paying tax. (4) On receipt of declaration in Form 'D' the Taxation Authority if it is satisfied that no tax, penalty or interest is due from the owner, shall make necessary endorsements in the certificate of registration and the 'Demand and Recovery Register and forward the second copy of the declaration to the other Taxation Authority. FORM' B' [Sec sub-rule (I) of rule 5] Declaration in respect of transport vehicles. 1. Name of owner 2. Particulars of permit-- Route.........._ (a) Permit No with-category Registration Trips NO. Distance operated perday (b) Route with via trips & distance in Kms. 3. Particulars of motor vehicle-- (a) Registration No (b) Registered seating capacity (c) Cross vehicle weight (d) Insurance certificate No. & validity date-- (e) Fitness valid upto-- 4. Tax tec. payable-- (a) Period for which tax is paid (i) Tax Rs, (b) Monthly/quarterly tax payable (ii) Penalty Rs. (according to slab distance/Gross vehicle weight) (iii) Interest Rs. (c) Tax paid: Total Rs. (d) bank draft/treasury challan No. & date Rs. 5. I hereby declare that the information given above in respect of the motor vehicle in my possession and use, is true. 6. I hereby further declare that the tax for motor vehicle specified above will be paid regularly at your........................office to obtain token and that the tax shall not be paid in my other office without first informing you. Date................ (Signature of owner) Order of Taxation Authority (1) Schedule, part and slab applicable Rs. (2) Monthly/Quarterly rate of tax leviable Rs. (3) Penalty Rs. (4) Interest Rs. (5) Total amount Rs. (6) Amount paid Rs. Bank draft No/Treasury challan No............date............ Certified that the amount mentioned above has been duly received and token No...........dated............and certificate No............dated............(in case of PSVs. only) issued and details duly entered in the demand and Recovery Register. Taxation Clerk Taxation Authority. 35. Assessment and Appeal : The charge is fixed under the Act i.e. Section 3 of the M. V. Taxation Act, 1991. The procedure for payment of tax is provided in Section 5 of the Act. only) issued and details duly entered in the demand and Recovery Register. Taxation Clerk Taxation Authority. 35. Assessment and Appeal : The charge is fixed under the Act i.e. Section 3 of the M. V. Taxation Act, 1991. The procedure for payment of tax is provided in Section 5 of the Act. The tax levied is to be paid in advance by the owner of motor vehicle on the last day of the quarter and not exceeding two months; under Section 8 a declaration is required to be filed in the form prescribed. Section 10 deals with manner of payment of tax by production of demand draft of a scheduled bank. After payment of tax, a token is required to be issued by the Tax Authorities. Section 13 provides for penalty at the rate of 1 /3 of quarterly tax and also interest. Section 20 speaks about appeal against an order under Section 13 i.e. imposition of penalty or against seizure or against any order directing the amount of tax and penalty in respect of which appeal is being filed. Rule 18 framed under the Act prescribes a proforma for an appeal and some mandatory requirement- Rule 18 : Appeals.- (1) Any person aggrieved by an order passed by any officer under the Act or these rules against which an appeal lies, may within thirty days of the date of the knowledge of the order prefer an appeal to the Transport Commissioner, Madhya Pradesh, at Gwalior. (2) Every appeal shall-- (a) be in writing; (b) specify the name and address of the appellant; (c) specify the registration number, the seating capacity of the vehicle, the nature of the permit and the route for which the permit is granted; (d) specify the date of the order against which it is made; (e) specify the date on which the order was communicated to the appellant; (f) contain a clear statement of facts; (g) specify the amount admitted by the appellant to be due or refundable; (h) give the proof of payment of tax in respect of which appeal has been preferred; (i) specify the grounds on which the appeal is preferred; (j) state precisely the relief prayed for; (k) be signed and verified by the appellant or an agent duly authorised by him in writing in this behalf in the following form, namely : -- 1............the appellant named in the above memorandum of appeal do hereby declare that the facts stated therein are true to the best of my knowledge and belief. (3) The memorandum of appeal shall be accompanied by-- (i) an additional copy of the memorandum; (ii) the original or certified copy of the order appealed against; and (iii) a cash receipt or a treasury challan of rupees twenty five in token of the payment of fee. (4) The memorandum of appeal shall be presented to the appellate authority by the appellant or his duly--authorised agent When an appeal is presented by an agent duly authorised by the appellant, it shall be accompanied by a duly stamped letter of authority appointing him as such agent. (5) It the memorandum of appeal does not comply with all or any of the requirement of sub-rule (2) of this rule the appeal may be summarily rejected; Provided that no appeal shall be summarily rejected under this sub-rule unless the appellant is given such opportunity as the appellate authority thinks fit to amend such memorandum of appeal as to bring it in conformity with the requirements of the said sub-rule. (6) An appeal may also be summarily rejected on any other ground which shall be reduced in writing by the appellate authority; Provided that before an order summarily rejecting an appeal under this sub-rule is passed, the appellant shall be given a reasonable opportunity of being heard. (6) An appeal may also be summarily rejected on any other ground which shall be reduced in writing by the appellate authority; Provided that before an order summarily rejecting an appeal under this sub-rule is passed, the appellant shall be given a reasonable opportunity of being heard. (7) If the appellate authority does not reject the appeal summarily, it shall fix a date for hearing the appellant or his duly authorised agent. (8) The appellate authority may at any stage adjourn the hearing of an appeal to any other date. (9) If on the date fixed for hearing or any other date to which the hearing may be adjourned, the appellant does not appear before the said authority either in person or through an agent duly authorised by the appellant, the said authority may dismiss the appeal or may decide it exparte as it thinks fit. (10) When an appeal is dismissed or decided exparte under sub-rule (9), the appellant may, within thirty days from the date of such order, apply to the appellate authority for re-admission or re-hearing of the appeal and if the appellate authority is satisfied that the appellant or his agent duly authorised was prevented by any sufficient cause from appearing when the appeal was called for hearing, it may re-admit and re-hear the appeal on such terms and conditions, including cost, as it may think fit. (11) A copy of the order passed in appeal shall be supplied free of cost to the appellant and another copy shall be sent to the officer whose Order forms the subject matter of the appeal. 36. The question for consideration, therefore, is whether any procedure has been prescribed for assessment and quantification. Ordinarily, liability is fixed under the charging section and quantification is made during assessment and after assessment, procedure for recovery is to be found. Whether in the instant case, there is any procedure prescribed for assessment or exfacie the liability is being fixed without there being any assessment. The relevant provisions cited above speak about payment of tax for quarter Or more by a demand draft issued by a Scheduled Bank. The learned Advocate General appearing for the State submitted that there was no provision made for assessment but only a quantification. A perusal of first Schedule shows that different items with a specified rate. The relevant provisions cited above speak about payment of tax for quarter Or more by a demand draft issued by a Scheduled Bank. The learned Advocate General appearing for the State submitted that there was no provision made for assessment but only a quantification. A perusal of first Schedule shows that different items with a specified rate. The M. P. Motoryan Karadhan Rules, 1991 speak about filing of declaration under Rule 5 in Forms A, B and C. The relevant Form 'B' for our consideration is in regard to transport vehicles. The Form is in two parts. Serial No. 1 to 5 to be filled by the owner and the serial No. 6 to be filled by the Taxing Authority. A close scrutiny of the form reveals that while serial No. 1 to 5 are to be filled in by the owner with a declaration, the taxing authority has only to endorse the same. There is no latitude given for application of mind so as to make any assessment of tax. Whether any statement contained in Form 'B' can be said to be an order of assessment at all ? 37. In every taxing statute there are three stages as held in (1926) A.C. 37 at page 52 and A.I.R. 1947 F.C. 32 at page 35. The Supreme Court in M/s Goodyear India Ltd. v. State of Haryana MANU/SC/0194/1989 : AIR 1990 SC 781 held as under : 27. It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed. The realisation often is postponed to further date. The quantification of the levy and the recovery of tax are also postponed in some cases. It is well settled that there are three stages in the imposition of tax. There is the declaration of liability, that is the part of the Statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that ex-hypothesi has already been fixed. But assessment particularises the exact sum which a person is liable to pay. Lastly comes the method of recovery if the person taxed does not voluatarily pay. Next, there is the assessment. Liability does not depend on assessment, that ex-hypothesi has already been fixed. But assessment particularises the exact sum which a person is liable to pay. Lastly comes the method of recovery if the person taxed does not voluatarily pay. Reference may be made to the observations of Lord Dunedia in Withney v. Commissioner of Inland Revenue (1926) AC 37 at p. 52 and of the Federal Court in Chatturam v. CIT, Bihar (1947) 15 ITR 302 at p. 308 : (AIR 1947 FC 32 at p. 35). Thus, we have to find out whether provisions of the Act are specific about the three stages, so far as liability to pay is fixed under Section 3 read with Schedule. The question, therefore, is whether the second stage of assessment can be waived and quantification straightway can be made and whether quantification should come in after assessment. In the Act and Rules, the procedure for assessment is absent. As such, whether the procedure can be said to be arbitrary ? We have reproduced the relevant provisions of the Act and the rules and forms provided therein. The tax has been considerably enhanced. There is no machinery provided for any proper assessment. Even though there may be legislative competence to make the law, the same may suffer from arbitrary procedure; hence ultra vires. We have examined the scheme of the Act and Rules which shows that no discretion is given to the taxing authority to apply its mind except to fill in the form mechanically. Since the demands ex facie place heavy burden, it should provide for proper assessment before qualification can be made. Further no appeal can be preferred unless the amount of tax is paid, even the rules make compliance mandatory. The tax is required to be paid in advance. The provisions for refund provide for certain procedure. Section 14 of the Act speaks about refund. But what is important to note is that the demand in advance is already made without there being any authority to tax as the vehicle has not been used. The tax liability even though fixed under the Act, it does not become quantified unless assessed. As such absence of procedure for assessment makes the procedure for refund also uncertain. But what is important to note is that the demand in advance is already made without there being any authority to tax as the vehicle has not been used. The tax liability even though fixed under the Act, it does not become quantified unless assessed. As such absence of procedure for assessment makes the procedure for refund also uncertain. The whole scheme of refund contemplated is arbitrary as intimation of non-use is to be given before the commencement of the period of non-use. Had there been a proper procedure for assessment, such a unnecessary burden would not have been placed on the assessee. 38. We are, therefore, of the view that in the absence of any provision for assessment, the Act is unworkable. Since no discretion is given to the taxing authority, the provision of appeal is also rendered nugatory i.e. in absence of any legal order of assessment, the appeal filed will be futile to the extent it provides for challenge to any other order except under clause (a) & (b) of the Section 20 of the Act. It may not be understood for a moment that condition for payment of tax or penalty is illegal, what we want to say is that in absence of any procedure for assessment and quantification, in respect of clause (c) of Section 20, the Act is wholly arbitrary and imposes a heavy burden making the procedure arbitrary. 39. The learned Advocate General has placed reliance on the order passed in M. P. 1372/82 in the case of M/s Jeewanlal Shankarlal, decided on 23-7-1990. In that petition, learned Judges were not concerned with the validity of the tax or the attack on the ground that there being no provision for assessment, or the scheme of the Act was unworkable. We may refer to para 5 of the order, which is reproduced below : It was also argued by the learned counsel for the petitioner that in absence of any assessment of tax, no proceedings for recovery of tax could be taken. Firstly, such a ground has not been taken in the petition. Secondly, a perusal of the Schedule prescribing the rate of tax would show that for the imposition of tax, what is required to be done is merely a mechanical task of calculation. It requires no application of mind for determination of tax determinable under law. Firstly, such a ground has not been taken in the petition. Secondly, a perusal of the Schedule prescribing the rate of tax would show that for the imposition of tax, what is required to be done is merely a mechanical task of calculation. It requires no application of mind for determination of tax determinable under law. What has been stated is that it is only a mechanical task of calculation of tax without application of mind. It is true that filling in the Form 'B' referred to above is only mechanical but question is whether the absence of provision for assessment is a fatal missing link in the scheme of taxation, making it unworkable. We would have read down the provision to hold that it was obligatory for the tax authority to give reasons in Form 'B'-item 6. However, the Form 'B' does not give any scope for giving any reasons or application of mind. To make the provision workable, it is necessary and obligatory that a provision for assessment with whole scheme for initiation, limitation, quantification is provided in the Act we cannot legislate. 40. A perusal of the scheme of the Act reveals that the tax liability is presumed and the payment to be made is obligatory in advance. Though the provision of appeal exists, it is rather not in the nature of an appeal, the reason being that there is no order of assessment. In order to find out the obligation to make any order, we examined the scheme of the Act and Rules. Neither the word "assessment" is defined nor the word "order", even by exception is to be found in any of the provisions. A perusal of the rules also reveals that only a proforma refund voucher is to be issued. It does not provide for passing an order. 41. In K. T. Mupil Nair v. State of Kerala MANU/SC/0042/1960 : AIR 1961 SC 552 , the grounds of attack taken by the petitioner were : (i) Levy of tax at a flat rate of Rs. It does not provide for passing an order. 41. In K. T. Mupil Nair v. State of Kerala MANU/SC/0042/1960 : AIR 1961 SC 552 , the grounds of attack taken by the petitioner were : (i) Levy of tax at a flat rate of Rs. 2 per acre irrespective of the quality of the land or its productive capacity, was arbitrary and unreasonable and violative of article 19 (1) (f) of the Constitution; (ii) The Act did not provide for issue of notice, enquiry or investigation of facts before the provisional assessment was made; (iii) no right of appeal was provided to any higher authority against the order of provisional assessment; (iv) no provision for hearing the assessee at any stage was provided under the Act. The Supreme Court struck down the provisions on the following grounds : "The Act thus proposes to impose a liability on land-holders to pay a tax which is not to be levied on a judicial basis, because-- (1) the procedure to be adopted down not require a notice to be given to the proposed assessee; (2) there is no procedure for rectification of mistake committed by the assessing authority; (3) there is no procedure prescribed for obtaining the opinion of a superior Civil Court on questions of law, as is generally found in all taxing statutes, and-- (4) no duty is cast upon the assessing authority to act judicially in the matter of assessment proceedings. Nor is there any right of appeal provided to such assessees as may feel aggrieved by the order of assessment. 42. We may also refer to a decision of the Supreme Court in The State of Andhra Pradesh and another v. Nalla Raja Reddy and others MANU/SC/0041/1967 : AIR 1967 SC 1458 , in which a flat rate of levy under Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision (Amendment) Act was struck down by the Andhra Pradesh High Court and was upheld by the Supreme Court. 43. 43. We may here straightway state that except for providing an appeal under Section 20 of the Act, the whole machinary provided is one sided i.e. either under the Act or Rules such as there can be no issuance of token even after filing declaration if the tax authority insists that tax which is not due or payable is not paid nor there is any enquiry or procedure for hearing or notice as in Moopil Nair's case. The operators are at the mercy of taxing authority. No motor vehicle can be operated unless token is issued. See : Sections 5, 8 and 10 also Rules 5, 6, 7, 8, 9 and the forms prescribed under the Rules. 44. We may refer to a judgment of the Karnataka High Court in Ganesha Krishna Bhat c. State of Karnataka (1989) 73 STC 267 in this regard. In that case, a lumpsum entertainment tax was charged from Video Parlours initially at the rate of Rs. 100/-per month; then it was enhanced to Rs. 1000/- and ultimately it was enhanced to Rs. 2,500/- per month. The provisions for filing the return, assessment, quantification were not made applicable and the tax was to be paid, was challenged on the grounds of being arbitrary and unguided under Art. 14 of the Constitution. It was stated that there was no provision for reduction on any ground even if it was shown that no show was held or the theatre was closed for reasons beyond the control of the assessee. It was said that the demand made unscientific and arbitrary method of assessment was adopted. It did not fit in with the scheme of levy of entertainment tax which was on each admission and show. It was said that the demand made unscientific and arbitrary method of assessment was adopted. It did not fit in with the scheme of levy of entertainment tax which was on each admission and show. In Ganesh Krishna Bhat's case referred to above, it has been held that :-- It is contended on behalf of the respondents by Sri Dattu, learned High Court Government Pleader, that the levy on video shows is also a levy on entertainment under the Act which provides for levy of tax on entertainments, that the special provisions are provided under Section 48 having regard to the fact that the exhibitors of video shows are treated as a distinct class of exhibitors different from the other owner or exhibitors, who pay the tax under Section 3 or 4-A, in addition to the show tax; that the permits are issued by the District Magistrates under the VCR Rules and the levy of tax on the said licences is provided by the special provisions of Section 4B having regard to the fact that the video shows are meant for a smaller number of people at a time and are not exhibited in a regular cinema house, and that, therefore, the insistence on all the other elaborate procedure as are applicable to the other exhibitors of cinema shows is dispensed with. It is also argued that these special provisions are provided in place of and as a substitution for the procedure to levy tax under the Act which is applicable to others. It is also demonstrated in the statement of objections that the levy on video shows, which calculated and levied applying the provisions of either Section 3 or 4A, the tax effect on the petitioners per month on the basis of the number of shows or on each admission, would be far heavier. It has further been held that :-- But the more important ground of attack by the petitioners which is dealt with by Court earlier is that the levy suffers from arbitrariness and unreasonableness which can not constitute a sound foundation to justify any fiscal statute. It has further been held that :-- But the more important ground of attack by the petitioners which is dealt with by Court earlier is that the levy suffers from arbitrariness and unreasonableness which can not constitute a sound foundation to justify any fiscal statute. It is demonstrated that from the very nature of the scheme of Section 4B and the absence of any provision providing for any reduction or waiver of this fixed levy, the petitioners cannot claim any deduction or waiver of the tax even if it is proved to the satisfaction of the authorities administering the Act that for any reason beyond the control of the licensees, they could not conduct any shows or conduct the number of shows permitted in the licence. That the impugned provisions do not contain such provisions cannot be disputed. The impugned provisions which impose a fixed rate of tax irrespective of whether the exhibitor has run the shows or not for various reasons, introduces an unscientific and arbitrary method of assessment. What is more, it does not fit into the scheme of levy of entertainment tax under the Act which is levied either on each admission Or on each show. Therefore, for the reasons, stated above, Section 4B of the Act under which the tax is levied on video shows is liable to be struck down. The writ petitions are accordingly allowed, and Section 4B of the Act is declared unconstitutional. The State Government is given three months' time to give effect to this ruling. Similarly, in the instant case, the tax levy has not been demanded for use, or suitable for use on road in respect of categories Of vehicles. The quantification by mechanical process is nothing but arbitrary. But, what we want to say is that the legislature in its wisdom, may fix any rate but totally negating the procedure for assessment, casts an arbitrary and oppressive burden and deprivation of fair procedure ordinarily available in taxing statute. We may further state that even if a right of appeal is provided, the same it is not effective. The procedure for refund too cannot cure the defect as the amount would be collected without authority, though refunded subsequently. If there is a proper procedure for assessment, unnecessary duplication of procedure can be avoided. We may further state that even if a right of appeal is provided, the same it is not effective. The procedure for refund too cannot cure the defect as the amount would be collected without authority, though refunded subsequently. If there is a proper procedure for assessment, unnecessary duplication of procedure can be avoided. The demand of tax without assessment is extraction without authority of law hence void and ultra-vires under Article 14 of the Constitution as also under Article 19(1)(G) of the Constitution. We have already rejected the challenge on the ground of lack of legislative competence under challenge 1 on the ground of violation of Article 101 of the Constitution of India i e. challenge II and challenge no. 3 as being violative of Article 19(1)(G) of the Constitution of India. That none of the provisions of the Act is declared ultra-vires but the procedure is arbitrary and unworkable. 45. The challenge on the ground that the Act No. 25/91 and 26/91 and the M. P. Motaryan Karadhan Adhiniyam, 1991, is held arbitrary and violative of Article 14 of the Constitution as the procedure prescribed is not fair and reasonable, inasmuch as, no procedure for assessment has been prescribed and the right of appeal is nugatory in absence of the provision for assessment in respect of Section 20 (c) of the Act alone. 46. We therefore, direct the respondents to take steps for providing the steps for assessment as per law. Since under section 3 of the Act, liability is already created, it is open to the State to make proper provision for assessment, filing of return, payment of tax etc. 47. We, in the meantime, restrain the respondents from recovering any tax over and above levied immediately before coming into operation of the Act No. 25/91 and 26/91. The tax already paid under Act No. 25/91 and also under Act No. 26/91 shall not be refunded. Further we direct that the tax prescribed in Schedule I under sub-section (1) of Section 3 of the Act in respect of all other vehicles i. e. public service vehicles shall be recoverable as per Schedule 1 except clause (iv).clause (d) 1 and 2 shall not be recoverable at the rate specified as indicated above. However, they will go on depositing the tax at the rate prevailing immediately before the operation of the Act No. 25/91 and 26/91. However, they will go on depositing the tax at the rate prevailing immediately before the operation of the Act No. 25/91 and 26/91. No challenge was made by any other category to the provisions of the act or rules except Schedule I Clause (iv)(O) (1) (2) hence all other categories of vehicles by whatever name will go on depositing the tax as per rate mentioned in the Schedule 1 of the Act No. 25/91 as amended by Act No. 26/91. 48. For the reasons given, the petition is partly allowed, as indicated above. There shall be no order as to costs.