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2005 DIGILAW 307 (KAR)

K. T. RAJASHEKAR v. STATE OF KARNATAKA

2005-05-25

K.L.MANJUNATH, N.K.SODHI

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N. K. SODHI, CJ. ( 1 ) THIS order will dispose of a bunch of writ appeals (writ appeals Nos. 2327-28, 2329, 33 76, 4331, 5550 of 1999) and writ petition No. 28589-615 of 1999 in which common questions of law and fact arise. Counsel for the parties are agreed that the decision in writ appeal No. 3376 of 1999 will govern the other cases as well. Writ petition 28589-615 of 1999 came up for hearing before a learned single Judge and when he was informed that the issues involved therein were pending in these writ appeals the same was referred to be heard along with these cases. ( 2 ) FOR the sake of convenience, facts are being taken from writ appeal No. 3376 of 1999. ( 3 ) THE short question that arises for consideration in writ appeal No. 3376 and other cases is whether the action of the respondents in levying higher rate of tax under the Karnataka Motor vehicles Taxation Act, 1957 (hereinafter called the Taxation Act') in respect of private service vehicles registered in the name of Bharath Earth Movers Limited (for short' the Company') treating them as contract carriages is justified. ( 4 ) THE Company is a public sector undertaking of the Government of India and is employing several thousand employees residing at various places in, and around Bangalore district. It has its factory 'bangalore Complex' situated at New Thippasandra Post, Bangalore. With a view to provide transportation facilities to its employees the Company invited tenders for hiring Contractors to ply 23 buses on its behalf to pick up its employees from their residence to the factory for work and to drop them back after the work at various places from the factory. The tender submitted by M/s. N. T. Rahamathulla Khan and Associates (hereinafter called the Contractor) was accepted and the Company entered into an agreement with the Contractor on 23. 4. 1994 for carrying its employees to and from the factory. The agreement was initially executed for a period of three years and the same was renewed on 1. 5. 1997 and the same was still in force when the writ petition came to be filed out of which the present appeal has arisen. 4. 1994 for carrying its employees to and from the factory. The agreement was initially executed for a period of three years and the same was renewed on 1. 5. 1997 and the same was still in force when the writ petition came to be filed out of which the present appeal has arisen. As per the agreement, the Contractor is to ply the buses on behalf of the Company to carry its employees from various points in and around Bangalore district to the factory and back at the prescribed timings on all working days of the month as decided by the Company. The payment to be made to the Contractor was also agreed between the parties as per Annexure-II to the agreement. The Company agreed to pay hire charges of Rs. 10. 50 per kilometer per bus per day and over and above the run of 200 kilometers per day it is paying Rs. 9. 50 per kilometer per bus per day. It appears that after the agreement had been executed the Contractor transferred 23 vehicles in the name of the Company and approached the authorities under section 50 of the Motor Vehicles Act, 1988 (hereinafter referred to as the M. V. Act) to get the transfer registered in its name. It is common case of the parties that the vehicles stand transferred in the name of the Company hi the registration certificates. These vehicles had not been purchased by the Company as no monetary consideration had passed nor are they included in the fist of assets of the Company. The Company then obtained permits from the Regional Transport Authority for plying the vehicles as Private service vehicles for carrying its employees to and from the factory. It is not in dispute that permits were issued in the name of the Company on the basis of which the Contractor, is plying the vehicles on behalf of the former in terms of the aforesaid agreement. It is also not in dispute that the Contractor while plying the buses is not carrying any passenger for hire or reward but is only transporting the employees of the Company to and from the factory. ( 5 ) THERE is in force in the State of Karnataka the Taxation Act which provides for the levy of Tax on all motor vehicles which are suitable for use on roads. ( 5 ) THERE is in force in the State of Karnataka the Taxation Act which provides for the levy of Tax on all motor vehicles which are suitable for use on roads. Section 3 of the Taxation Act which is the charging section provides that "a tax at the rates specified in part A of the Schedule shall be levied on all motor vehicles suitable for use on roads". According to Section 4 of this Act the tax levied under Section 3 is to be paid in advance either by the registered owner of the vehicle or by any other person having possession or control of the motor vehicle for a quarter, half year or year at his choice within fifteen days from the commencement of such quarter, half year or year, as the case may be. Part A of the Schedule to the Taxation Act prescribes the rates of tax to be levied on different kinds of motor vehicles. Different rates have been fixed for contract carriages and private service vehicles. Taxes in regard to the vehicles which were transferred in the name of the Company were being paid treating them as private service vehicles ever since the agreement was executed between the parties. The Auditors raised an objection that since the vehicles had been transferred in the name of the Company without consideration, the latter could not be said to be the owner and, therefore, the vehicles had not been used as private service vehicles. They further said that the vehicles were being operated by the Contractor under a contract and, therefore, those were contract carriages. Accordingly a notice under Section 8a of the Taxation Act was issued to both the parties to show cause why tax at the higher rate be not levied in terms of clause 5 (a) of the Schedule treating the vehicles as contract carriages. The Company and the Contractor filed their replies which were not accepted and the Regional Transport Officer-cum-Taxation Authority, Bangalore held that the vehicles were transporting the employees of the Company on contract basis and were therefore liable to be taxed at the higher rates applicable to contract carriages. The company and the Contractor were directed to pay the balance difference of tax and created a demand accordingly. The company and the Contractor were directed to pay the balance difference of tax and created a demand accordingly. Feeling aggrieved by this order both the parties filed appeals under Section 15 of the Taxation Act before the Deputy Commissioner for Transport which were dismissed and it was held that the Company was not the owner of the vehicles because no monetary consideration had passed when the vehicles were transferred in its name. The Appellate Authority further found that the employees were being transported by the Contractor on the basis of an agreement entered into with the Company and therefore the vehicles were being used as contract carriages. Both the orders were then challenged in the writ petitions filed by the parties out of which the present set of appeals have arisen. All the writ petitions were dismissed by the learned single Judge by a common order dated 17. 3. 1999 upholding the stand of the Department. It is this order which is under challenge in this bunch of writ appeals. The orders passed by the authorities under the Taxation Act are rider challenge in the writ petition. ( 6 ) WE have heard the learned Counsel for the parties. Clause 5 (a) and sub-clause (b) to (e) of clause (8) of the Schedule to the Taxation Act which are relevant for our purpose may be reproduced hereunder for facility of reference.