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2009 DIGILAW 157 (CHH)

RAJKUMAR GUPTA v. STATE OF C. G.

2009-05-05

DHIRENDRA MISHRA, R.N.CHANDRAKAR

body2009
ORDER As per Hon'ble Shri Dhirendra Mishra, J. : 1. These petitions are being disposed of by this common order as in all these petitions common questions of facts and law are involved. The petitioners by way of above petitions are challenging the notification dated 21sl October, 2005, whereby respondent No.1 in exercise of powers conferred by sub-section (1) read with sub-section (2) of Section 14 of the Chhattisgarh Motoryan Karadhan Adhiniyam, 1991 (in short "the Act, 1991") has amended sub-rule (2) of Rule 11 and sub-rule (2) of Rule 12 of the Chhattisgarh Motoryan Karadhan Rules, 1991 (in short "the Rules, 1991 "), and substituted the word "Rupees Five Hundred" in place of word "Rupees Ten". 2. The petitioners have challenged the above amendment on the ground that: (i) there is no power vested with the State Govt. under sub-section (1) read with sub-section (2) of Section 14 of the Act, 1991 to amend the Rules, 1991 and (ii) that enhancement to Rs.500/- from Rs.l0/- is arbitrary and ultra vires to Article 14 & 19(1 )(g) of the Constitution of India, as it has been made without providing any additional services to the motor vehicle owners-the petitioners and the same has been imposed without due process of law and without affording any opportunity of hearing to the petitioners. 3. Placing reliance on the judgment in the matters of Jindal Stainless Ltd and Another Vs. State of Haryana and Others] Shri Rawat, learned counsel for the petitioners, vehemently argued that there is a basic difference between levying tax and fee/compensatory as former is based on the concept of burden whereas compensatory tax/fee is based on the concept of recompense/reimbursement. Imposition of fee is based on the 'principle of equivalence'. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/ services rendered by the State in lieu of receipt of fee. Imposition of fee is based on the 'principle of equivalence'. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/ services rendered by the State in lieu of receipt of fee. In the instant case, by the impugned amendment in Rule 11 (2) and Rule 12(2) of the Rules, 1991, the intimation of non use of the motor vehicles to be submitted in Forms K & M to the Taxation Authority, is to be accompanied by cash ofRs.500/- in place of Rs.l 0/-, which was the earlier requirement, though there is no any corresponding additional service/benefit to the owners of the motor vehicles being rendered by the State in lieu of exorbitant enhancement in the fee. 4. The respondents, in their return dated 6.8.2006, have adopted the return of Annexure R/l filed in WP No.6389/05. With respect to the first ground that the State has no power to amend the Rules, 1991 under sub-section (1) read with sub-section (2) of Section 14 of the Act, 1991, it has been stated that in Hindi version of the notification published in Govt. Gazette, dated 4th November, 2005, reference to sub-section 14(1) and (2) has been inadvertently made, whereas English version simultaneously published alongwith Hindi version, correctly mentions that the rules have been amended in exercise of powers under Section 24 of the Act, 1991. The inadvertent error in the Hindi version has been since corrected vide notification dated 8th June, 2006 (Annexure R/l). In reply to the another objection that the impugned notification is arbitrary and in violation of the provisions of Article 14 & 19(1)(g) of the Constitution, it has been averred that fee of Rs.l0/- for application under Rule 11 (2) and Rule 12 (2) was prescribed in the year 1992 as per circumstances prevailing then. Since then there is a considerable change in circumstances as there were very rare instances of the incidence of deposit of permits and non use of vehicles in the midst of validity period in the year 1992. However, the aforesaid provision is now being used by unscrupulous elements with the intention of making illegal gain and thus, the incidence of deposit of permits and non use of motor vehicles has increased manifold. However, the aforesaid provision is now being used by unscrupulous elements with the intention of making illegal gain and thus, the incidence of deposit of permits and non use of motor vehicles has increased manifold. Citing the statistics of the year 2005-06, it has been further averred that the applications in Form K under Rule II with respect to 6676 passenger buses and 6738 goods carriage vehicles were received from the operators. The State had to refund Rs.l ,66,76,550/- per quarter on account of non use of the above vehicles. Similarly, during the same period, permits issued to 1606 passenger buses were deposited under Form M and for which, the Public Exchequer had to bear extra financial burden ofRs.1 ,42,45,945/- as the same was to be refunded to the depositors of the permits. Processing of applications under Form K & M submitted under Rules 11 (2) & 12(2) of the Act, 1991, also requires extra exercise in terms of maintenance of account, account books as well as mobilization of large forces of inspecting staff to ensure that the deposit of permit as well as intimation of non use is in fact put into operation and the same is not misused by the motor vehicle owners with malafide intention of personal gain at the cost of Public Exchequer. Enhancement in the fee has been made to meet the extra expenditure incurred by the State. The increase in the fee is also to be considered in the light of prevailing inflation and fast falling value of the Indian currency. 5. Reliance is placed on the orders passed in the matters of Municipal Corporation of Delhi and Others Vs. lvfohd. Yasin2, Ved Prakash Agrawal and others Vs-. Commissioner, Gorakhpur Division, Gorakhpur and others3 and Jindal Stainless Ltd. and another Vs. State of Haryana and others]. 6. We have heard learned counsel for the parties and perused the material available on record, including the impugned notification. 7. The Act, 1991 regulates levy of tax on motor vehicles; liability and mode of payment of tax. Section 3 of the Act, 1991 provides for levy of tax,on motor vehicles. Section 5 provides for the manner in which tax is to be paid by the owner of the vehicle. 7. The Act, 1991 regulates levy of tax on motor vehicles; liability and mode of payment of tax. Section 3 of the Act, 1991 provides for levy of tax,on motor vehicles. Section 5 provides for the manner in which tax is to be paid by the owner of the vehicle. Section 8 deals with filing of declaration and determination of tax payable, it also provides for filing of additional declaration by the owners where the vehicle is used for any other purpose where higher rate of tax is payable. Section 14 provides for refund of tax already paid by the owners on the ground that the vehicle was not used during the period for which tax was already paid. Sections 15 and 16 provides for recovery of tax, penalty with interest in the event of failure of the owner to pay tax. Section 24 confers upon the government power to make rules for the purpose of carrying into effect the provisions of the Act. 8. From perusal of the impugned notification (Annexure P/l), it appears that in Hindi version of the notification, the rules have been amended in exercise of powers under sub-section (1) read with sub-section (2) of Section 14, though from bare reading of the above provision, it is evident that no power is available to the State Govt. under the aforesaid section to amend the rules. However, in the English version of the notification, reference is to sub-section (1) read with subsection (2) of Section 24 of the Act, 1991. The above inadvertent mistake has been subsequently rectified by another notification dated 25th May, 2006 published in Government Gazette dated 16th June, 2006. 9. In the matters of Jindal Stainless Ltd.], after elaborately discussing the difference between tax, fee and compensatory tax, it has been held that the basis of tax is the ability or capacity of the taxpayer to pay tax. The principle behind levy of tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement, whereas, a fee is generally a term of a licence. It is based on the 'principle of equivalence'. The basis of a fee or compensatory tax is the same. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement, whereas, a fee is generally a term of a licence. It is based on the 'principle of equivalence'. The basis of a fee or compensatory tax is the same. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is measurable. The basic difference between the tax, on the one hand, and fee/compensatory tax on the other, is that the former is based on the concept of burden whereas the latter is based on the concept of recompense/reimbursement. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which has to be reim bursed by compensatory tax or in the form of compensatory tax. In para 41 of the above judgment it has been further observed that compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the costs of regulation or to meet the outlay incurred for some special advantage to trade, commerce and intercourse. It may incidentally bring in net-revenue to the government but that circumstance is not an essential ingredient of compensatory tax. 10. Similarly, in Municipal Corporation of Delhi, the notification issued by the Delhi Municipal Corporation enhancing the fee for slaughtering animals from Rs.0.25 to Rs.2/- for each animal, was quashed by the High Court of Delhi on the ground that the Corporation was, in fact, proposing levy of tax under the guise of enhancing the fee. In appeal preferred by the Municipal Corporation, the Hon'ble Supreme Court, after dealing with its various judgments on the subject matter, has held in para 9 thus: "9. What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory extraction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefits provided or privilege conferred. Compulsion is not the hallmark of the distinction between a tax and a fee. Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need nor be direct, a mere casual relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost ofthe services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad coreiation ship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax." Considering that the price of meat has gone up about 1 0-12 times since the rates were originally fixed, the increase of fee was held to be wholly justified in the circumstances of the case and the appeal was allowed with costs. 11. In the case of Ved Prakash Agrawal, the brick kiln owners filed writ petition before the High Court making a grievance that levy of licence fee at the rate of Rs.l 00/- per chimney per year over the brick kiln owners under the byelaw framed by the respondent Zila Panchayat, was illegal and unconstitutional as no service was being rendered to them. To justify the realization of the licence fee on the principle of quid pro quo, the petition was allowed by the learned Single Bench by holding that no service was being rendered by the Zila Panchayat to the brick kiln owners. However, in appeal, the Division Bench dismissed the writ petition. To justify the realization of the licence fee on the principle of quid pro quo, the petition was allowed by the learned Single Bench by holding that no service was being rendered by the Zila Panchayat to the brick kiln owners. However, in appeal, the Division Bench dismissed the writ petition. Dismissing the appeal of the brick kiln owners, the Hon 'ble Supreme Court observed that for justifying levy of fees, it is not possible to ascertain or to establish that whatever has been realized as fee has been spent to render service to the person concerned. 12. So far as argument of the petitioners based on the inadvertent mistake in Hindi version of the notification dated 21st October, 2005, where reference to sub-section (1) read with sub-section (2) of Section 14 of the Act, 1991 has been made, for amending the Rules 11(2) & 12(2) of the Rules, 1991, is concerned, keeping in view the fact that in English version of this notification published simultaneously, there is reference to the correct section, and moreover, subsequently, by publication of fresh notification dated 8th June, 2006 in the Government Gazette, dated 16th June, 2006 (Annexure R/l), the above inadvertent mistake has been rectified, we're of the opinion that the same can not be a ground to declare the amendment in Rules 11(2) & 12(2) of the Rules, 1991 ultra vires. 13. 13. So far as the objection that enhancement in the fees as prescribed under Rules II (2) & 12(2) of the Rules, 1991 has been made without any additional services/benefits to the owners of the motor vehicles and same is, in fact, imposition of tax in the garb of enhancement of fees, is concerned, keeping in view the reasons assigned in the counter affidavit, wherein it has been mentioned that the incidence of submission of applications under the above rules pertaining to non user of the vehicles and non user of the permits, has enhanced manifold in this period resulting in refund of huge amount of the deposited tax, and the department is forced to keep extra vigilance to verify genuineness of the forms of the non users of the motor vehicles and surrender of permits, which is causing extra expenditure on the Public Exchequer, we're of the opinion that it is neither necessary nor expedient to meticulously examine the enhancement in fees vis-a-vis enhancement in expenditure incurred by the respondents in processing the applications and supervising the genuineness of non user of the motor vehicles and permits by the owners of the motor vehicles. The only requirement for imposing fee is that there has to be a broad correlation ship between the imposition of fee and the services rendered in lieu thereof. Quid pro quo in the strict sense is not the one and only true index of the fee. 14. On the basis of aforesaid discussions, we find no substance in these petitions. Amendment in Rules 11 (2) & 12(2) of the Rules, 1991 by the impugned notification is neither illegal nor unconstitutional. The petitions are, accordingly, dismissed. 15. No order as to costs. Petitions Dismissed.