Holding

Additional tax under section 8 is not payable for occasional over‑loading; tax liability is limited to the number of passengers the vehicle is permitted to carry, and the High Court’s decision in Noorullha Khan’s case is overruled.

Summary

The appellant, a registered owner of a motor vehicle operating as a stage carriage under a permit, was assessed additional tax under section 8 of the Karnataka Motor Vehicles Taxation Act, 1957 because on some occasions he carried more passengers than permitted. The High Court upheld the demand, relying on Noorullha Khan v. State of Karnataka, but the Supreme Court examined the wording of item 4(2) of the Schedule, which ties tax liability to the number of passengers the vehicle is permitted to carry. The Court held that the vehicle had not been altered nor proposed to be used in a manner attracting a higher tax rate, and that occasional over‑loading does not trigger section 8. Consequently, the High Court’s decision was overruled and the demand for additional tax was set aside, with a direction to enforce permit conditions under section 60 of the Motor Vehicles Act, 1939.

Issues considered

Whether occasional over‑loading of a stage‑carriage vehicle attracts additional tax under section 8 of the Karnataka Motor Vehicles Taxation Act, 1957.
Whether the phrase ‘which the vehicle is permitted to carry’ in item 4(2) of the Schedule limits tax liability to the permitted passenger capacity.
Whether the High Court’s reliance on Noorullha Khan v. State of Karnataka was correct.

Legislation cited

Karnataka Motor Vehicles Taxation Act, 1957s. 3, s. 8
Motor Vehicles Act, 1939s. 2(20), s. 2(29), s. 2(j), s. 42, s. 48(3)(vi), s. 60

Subjects

motor vehicle taxstage carriageadditional taxover‑loadingsection 8permit conditionsstatutory constructionKarnataka Motor Vehicles Taxation ActMotor Vehicles Act

Judgment

..i..
M. NARASIMHAIAH
A
v.
DEPUTY COMMISSIONER FOR TRANSPORT,
BANGALORE DIVISION, INFANTRY ROAD,
BANGALORE & ANR.

B NOVEMBER 24, 1987
r
[E.S. VENKATARAMIAH AND KN. SINGH, JJ.]

Karnataka Motor Vehicles Taxation Act, 1957-Levy of addi- _)I
tional tax under section 8 thereof on stage carriage.
c The appellant was a registered owner of a motor vehicle run by
r
.. '"'I
him as a stage carriage under a permit issued nuder the Motor Vehi-
des Act, 1939. He was liable to pay tax iu respect of the vehicle under
section 3 of the Karnataka Motor Vehicles Taxation Act, 1957, which
provides that a tax at the rates specified in Part A of the Schedule to
D the Act shall be levied on all motor vehicles suitable for use on roads,
and item 4 in Part A of the Schedule to the Act, as it stood in 1985,
r
relates to the levy of tax on the motor vehicles used as stage carriages.

On some occasions, it was found that the appellants stage car-
riage was carrying passengers in exeess of the number of passengers
allowed to be carried under the permit issued to him under the Motor
-,
E
Vehicles Act, 1939. The taxation authority under the Karnataka Act
above-said issued to him a demand for the payment of additional tax
under section 8 of the said Act. The appellant filed a writ petition, \
challenging the demand for the additional tax. The High Court dismis- '.
sed the petition, following its earlier decision in Noorullha Khan v.
F State of Karnataka (Writ Petition No. 8302 of 1980, etc. decided on Y'
26.6.85.)' The appellant appealed to this Court by special leave against
the order of the High Court.

Allowing the appeal, the Court,
~

G HELD: The taxation authority levied the additional tax under
section 8 of the Karnataka Motor Vehicles Taxation Act, 1957, on the
ground that the appellant had proposed to use the vehicle in such a -(
manner as to cause the vehicle to become a vehicle in respect of which
a higher rate of tax was payable, in accordance with the decision of the
High Court in the Noorullha Khan's case. The payment of the addi-
H tional tax arises as per section 8 on two occasions--(i) when the Motor
10
M. NARASIMHAIAH v. DY. COMMR. TPT. 11

Vehicle is altered in such a manner as to cause the vehicle to become a A
!
vehicle in respect of which a higher rate of tax is payable, or (ii) when
any motor vehicle is proposed to be used in such a manner as to cause
the vehicle to become a vehicle in respect of which a higher rate of tax
is payable. The vehicle in question has not been altered, and it has
been used only as a stage carriage, even when two or five extra
persons have been carried. There is no other provision in Part A of the B
Schedule to the Act which requires a higher rate of tax to be paid in
respect of a vehicle which is being used as a si"ge carriage on the basis
Ir of a larger number of passengers that are carried in it. It would have
been possible to levy a higher tax on the appellant only if the words
\..
'which the vehicle is permitted to carry' in item 4(2) of Part A to the
Schedule to the Act had been omitted. These words cannot be ignored
' in the construction of the said item since it relates to the levy of tax.
c
Also, the provision in section 8 is specific. lt7G-H; 18A-C, F-G)

The High Court in Noorullha Khan's case ov.,rlooked the pre-
sence of the words 'which the vehicle is permitted to carry', found also
D
.; in clause (b) of item 7 of the Karnataka Act. A law which imposes a
tax should be construed strictly. A registered owner of a motor vehi-
cle, which is permitted to be used as a stage carriage cannot be asked
to pay additional tax under section 8 of the Act merely because he has
carried on some occasions more passengers than the maximum
nnmber of passengers that he is permitted to carry under the permit.
E
The tax which he is liable to pay is limited by the maximum number of
passengers he is entitled to carry under the permit. The Court does
.i not Jigree with the decisions of the High Court in the Noorullha
( Khan's case, which is overruled. The judgment of the High Court
impugned set aside and the respondents directed not to levy the addi-
tional tax on the appellant under section 8 of the Karnataka Taxation
F
Act for carrying more passengers than what he was permitted to carry
on some occassions during the period in question. Need impressed
upon the authorities to enforce the provision in section 60 of the Motor
Vehicles Act, 1939, strictly. [WA, D-F)

1 Payne v. Allock, [1932) 2 KB 413, referred to.
G

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3031
of 1987.

. From the Judgment and Order dated 9.7. !985 of the Kamataka
High Court in Writ Petition No. 31533 of 1982. H
12 SUPREME COURT REPORTS [ 1988] 2 S.C.R.

A S.S. Javali, Ravi P. Wadhwani, M.1rangaswamy, N.D.B. Raju,
C.~. Sucharita and Mrs. C.K. Sucharita for the Appellant.

K.L. Sharma and M. Veerappa for the Respondents.

The Judgment of the Court was delivered by

VENKATARAMIAH, J. Aggrieved by the levy of additional
tax under section 8 of the Karnataka Motor Vehicles Taxation Act,
1957 (hereinafter referred to as 'the Act') in respect of his motor
vehicle, which he has been running as a stage carriage under a permit
issued under the provisions of the Motor Vehicles Act, 1939, the
j
C appellant herein questioned the levy of the said additional tax before 1
the High Court of Kamataka in Writ Petition No. 31533 of 1982.
That writ petition was dismissed by the High Court following an
earlier decision of a Division Bench of that Court in Noorullha Khan
v. State of Karnataka (Writ Petition No. 8302 of 1980 and connected
cases decided on 26.6.1985). The appellant has filed this appeal by
D special leave against the decision of the High Court dismissing his
writ petition.

The facts of the case are briefly these. The appellant is the
registered owner of the motor vehicle which he has been running as a
stage carriage under a permit issued by the Regional Transport
E Authority under the provisions of the Motor Vehicles Act, 1939. He
is liable to pay tax in respect of the said motor vehicle under section 3
of the Act which provides that a tax at the rates specified in Part A of
the Schedule to the Act shall be levied on all motor vehicles suitable
for use or roads. Item 4 in Part A of the Schedule to the Act, as it
stood in the year 1985, which related to .the levy of tax on motor
F vehicles which were used as stage carriages reads thus:- )

Class of vehicles Quarterly tax for
vehicle fitted with
pneumatic tyres

G (1) (2)

"4. Motor Vehicles other than those
mentioned in items 5, 6 and 7 plying for
hire and used for transport of passengers
and in respect of which permits have been
H issued under the Motor Vehicles Act, 1939.
M. NARASIMHAIAH v. DY. COMMR. TPT. [VENKATARAMIAH, J.J 13
j
(i) Vehicles permitted to carry in all: Rs. p. A
> (a) not more than three persons 40.00
(other than the driver)

(b) Four persons (other than 75.00
the driver)
B
(c) Five persons (other than 90.00
the driver)
i(_, (d) Six persons (other than the driver) 200.00

(ii)(l) Vehicles permitted to carry c
f., more than six persons and plying
exclusively on routes within the limits
of cities and towns notified by the
Government and other vehicles not
falling under (2) below:
... D
(a) For every seated passenger 130.00
(other than the driver and the
conductor) which the vehicle is
permitted to carry.

(b) For every passenger (other than 45.00 E
the seated passenger, the driver ~nd
the conductor) which the vehic:le is
!
{
permitted to carry.

(2) Vehicles permitted to carry more
than six persons and the total mileage F
of which exceeds 100 kilometers
per day:

(a) For every seated passenger 160.00
-I . (other than the driver and the
conductor) which the vehicle is G
permitted to carry.

(b) For every passenger (other than 45.00
the seated passenger, the driver and
the conductor) which the vehicle is
permitted to carry." H

-- ~~
14 SUPREME COURT REPORTS [1988] 2 S.C.R.

A Item 5 of part A of the Schedule to the Act, as it stood during
the relevant time, referred to the tax payable by motor vehicles which
were used as contract carriages under permits issued under tire Motor
Vehicles Act, 1939. Item 6 of part A of the Schedule to the Act has
been repealed. Item 7 of Part A of the Sc,hedllle to the Act, as it
stood during the relevant period, dealt with the tax payable in respect
B of omnibuses. It read thus:

Class of Vehicles Quarterly tax for
vehicles fitted with
pneumatic tyres

c ( 1) (2)

"7. Omnibuses,- Rs. p.

(a) permitted to carry not more than 10 50.00
D persons (excluding the driver), for every
person which the vehicle is permitted
to carry:

(b) permitted to carry 11 persons or 100.00
more (excluding the driver), for every
E person which the vehicle is permitted to
carry."

The appellant was liable to pay at the time when he filed the
writ petition Rs.160.00 per quarter for every seated passenger (other
than the driver and the conductor) which the vehicle was permitted t11-
F carry and Rs.45 per quarter for every passengers (other than the sea-
ted passengers, the driver and the conductor) which the vehicle was
permitted to carry. Section 8 of the Act which provides for payment
of additional tax in respect of motor vehicles reads thus:-

"8. Payment of additional tax-When any motor vehicle
G in respect of which a tax has been paid is altered or pro-
posed to be used in a such a manner as to cause vehicle to
become a vehicle in respect of which a higher rate of tax is
payable, the registered owner or person who is in posses-
sion or control of such vehicle shall pay an' additional tax
or a sum which is equal to the difference between the tax
H already paid and the tax which is payable in respect of
M. NARASIMHAIAH v. DY. COMMR. TPT. [VENKATARAMIAH, J.] 15

such vehicle for the period for which the higher rate of tax A
is payable in consequence of its being altered or so pro-
;
posed to be used and taxation authority shall not grant a
fresh taxation card in respect of such vehicle so altered or
proposed to be so used until such amount of tax has been
paid."
B
It appears that on some stray occasions prior to the institution
of the writ petition it had been found that in the motor vehicle which
the appellant was operating as a stage carriage there were few passen-
gers in excess of the ·number of. passengers which he was allowed to
carry under the permit issued to him under the Motor Vehicles Act,
1939 in respect of the said motor vehicle. The taxation authority
)
under the Act, therefore, issued a demand for payment of additional
c
tax under the provisions of section 8 of the Act on the ground that
the appellant had proposed to use the motor vehicle in such a manner
as to cause the vehicle to become a vehicle in respect of which a
higher rate of tax was payable following the decision of the High
Court in Noorullha Khan's case (supra). Aggrieved by the said D
demand he filed the writ petition. As mentioned above, that petition
having been dismissed, this appeal by special leave has been filed.

Since the judgment of the High Court under appeal is based on
the decision in Noorullha Khan's case (supra) it is necessary to set
out briefly the facts in that case. Noorullha Khan who was the E
petitioner in that case was the registered owner of a motor vehicle
classified as an 'omnibus' with a seating capacity of 15 + I under the
I provisions of the Motor Vehicles Act,. 1939 and was subjected to tax
on that basis under item 7(b) of Part A of the Schedule to the Act.
He was liable to pay at the rate of Rs.100 per seat per quarter under
the said provision. He was, however, called upon by the taxation F
authority to pay an additional sum by way of tax on. two different
occasions calculating the tax on the basis of the number of passengers
carried in the vehicle on those two occasions. He challenged the said
demands before the Deputy Commissioner for Transport in appeal.
That appeal having been dismissed he filed Writ Petition No. 8302 of
r 1980, referred to above, on the file of the High Court. The High
Court took the view that the petition in that writ petition having used
G

the vehicle on two occasions for carrying passengers in excess of the
number of passengers which he was allowed to carry nnder the permit
he had become liable to pay additional tax for the 'proposed user' of
the motor vehicle in a manner different from the manner in which he
was permitted to run it. In support of its decision the High Court H
16 SUPREME COURT REPORTS [1988] 2 S.C.R.

A relied strongly on the decision in Payne v. Allcock, [1932] 2 K.B. 413
in which the conviction of the owner of a motor vehicle in respect of
which he had obtained a licence to use it as a private motor car for
having used it for the conveyance of goods had been upheld.

The Motor Vehicles Act, 1939 is a central act, which was enac-
B ted pursuant to Entry 20 of List III of the Seventh Schedule to the
Government of India Act, 1935 corresponding to Entry 35 of List III
of the Seventh Schedule to the Constitution of India. The Act under
which a tax is leviable on motor vehicles has been enacted by the
Kamataka State Legislature in exercise of its powers under Entry 57
of List II of the Seventh Schedule to the Constitution of India. Thus
C the scope of the Act and the scope of the Motor Vehicles Act, 1939
are entirely different. Section 42 of the Motor Vehicles Act, 1939
provides that no owner of a transport vehicle shall use or permit the
use of the vehicle in any public place whether or not such vehicle is
actually carrying any passenger or goods save in accordance with the
conditions of a permit granted or countersigned by a Regional or
D State Transport Authority or the Commission authorities the use of
the vehicle in that place in the manner in which the vehicle is being
used. The expression 'permit' is defined under section 2(20) of the
Motor Vehicles Act, 1939 as a document issued by the Commission
or a State or Regional Transport Authority authorizing the use of a
transport vehicle as a contract carriage, or stage carriage, or authoriz-
E ing the owner as a private carrier or public carrier to use such vehi·
cle. Section 2(29) of the Motor Vehicles Act, 1939 defines the expres·
sion 'stage carriage' as a motor vehicle carrying or adapted to carry
more than six persons excluding the driver which carries passengers
for hire or reward at separate fares paid by or for individual passen-
gers, either for the whole journey or for stages of the journey. Sec-
F tion 2(j) of the Act provides that the words and expressions used but
not defined in the Act, shall have the meanings assigned to them in
the Motor Vehicles Act, 1939. Section 48(3)(vi) of the Motor Vehi-
cles Act, 1939 provides that the Regional Transport Authority, if it
decides to grant a stage carriage permit, may grant the permit
specifying the maximum number of passengers that may be carried in
G the motor vehicle in respect of which the stage carriage permit is
issued. Section 60 of the Motor Vehicles Act, 1939 empowers the
Regional Transport Authority to cancel or suspend a permit for such
period as it thinks fit on the breach of any of the conditions attached
to the permit. Thus a person who has obtained a stage carriage
permit exposes himself to the cancellation of the permit itself under
H section 60 of the Act if he carries passengers in excess of the_
M. NARASIMHAIAH v. DY. COMMR. TPT. [VENKATARAMIAH, J.} 17

maximum number of passengers that he is permitted to carry under A
the permit.

Under clause (2) of item 4 of Part A of the Schedule to the Act
the owner of a vehicle used as a stage carriage the total mileage of
which exceeded 100 kilometers per day had to pay for every quarter
during the relevant time Rs.160 for every seated passenger (other B
than the driver and the conductor) and Rs.45 for every passenger
(other than the seated passenger, the driver and the conductor) which
the vehicle was permitted to carry. According to the above provision
if the owner of a motor vehicle, which is used as a stage carriage, who
is permitted to carry, say, 45 person including the driver and the con-
ductor of whom 40 are seated passengers and 3 are standing passen- c
gers, he has to pay Rs.6,535 for every quarter. The question is
whether he is liable to pay and additional tax under section 8 of the
Act if he carries on any occasion any passengers in excess of the
number of passengers he is permitted to carry. Let us assume that the
registered owner of the motor vehicle in the above case has carried
on one occasion in a given quarter 47 passengers (inclusive of the D
driver and the conductor) and on anoter occasion in the same quarter
50 passengers (inclusive of the driver and the conductor). In this
illustration the question which arises for consideration is whether the
registered owner is liable to pay Rs.6,535 for that quarter or Rs.6,535
plus the additional tax in respe,ct of two more passengers or Rs.6,535
plus the additional tax for five more passengers during that quarter. E

- Section 8 of the Act prqvides t'hat when any motor vehicle in respect
of which a tax has been paid is altered or proposed to be used,in such
a manner as to cause vehicle to become a vehicle in respect of which
a higher rate of tax is payable, the registered owner or person who is
in possession or control of such vehicle shall pay an additional tax of
a sum which is equal to the difference between the tax already paid F
and the tax which is payable in respect of such vehicle for the period
for which the higher rate of tax is payable in consequence of its being
altered or so proposed to be us,ed and the taxation authority shall not
grant a fresh taxation card in respect of such vehicle so altered or
proposed to be used until such amount of tax has been paid. The
crucial words in section 8 of the Act are 'when any motor vehicle G
. . . . . . . . is altered or proposed to be used in such a manner as to
cause the vehicle to become a vehicle in respect of which a higher
rate of tax is payable'. The payment of additional tax arises, there-
fore, only on two occasions; (i) when the motor vehicle is altered in
such a manner as to cause the vehicle to become a vehicle in respect
of which a higher rate of tax is payable; or (2) when any motor vehi- H
18 SUPREME COURT REPORTS [1988] 2 S.CR.

A cle is proposed to be used in such a manner as to cause the vehicle to
become a vehicle in respect of which a higher rate of tax is payable.
Admittedly, the vehicle in question has not been altered. The ques-
tion which remains to be considered is whether in the given case the
vehicle is proposed to be used in such a manner as to cause the vehi-
cle to become a vehicle in respect of which a higher rate of tax is
B payable. The vehicle in question has been used only as a stage
carriage even when two or five extra passengers have been carried.
There is no other provision in Part A of the Schedule to the Act
which requires a higher rate of tax to be paid in respect of a vehicle
which is being used as a stage carriage on the basis of a larger number
of passengers that are carried in it. In order to bring the case within
C the scope of section 8 of the Act it must be first shown that there is a
provision in the Act which makes a stage carriage vehicle which car-
ries a larger number of passengers than what is permitted under the
permit issued in respect of it is subject to a higher rate of tax. The
highest rate of tax in respect of a stage carriage that can be levied
under the Act is incorporated in clause (2) of item 4. Sub-clause (a)
p of clause (2) of item 4 of the Schedule to the Act provides that for
every seated passengers (other than the driver and the conductor)
which the vehicle is permitted to carry the registered owner is liable
to pay Rs. !6b and for every passenger (other than the seated
passenger, the driver and the conductor) which the vehicle is permit-
ted to carry has to pay Rs.45 per passenger per quarter. In both the

-
E sub-clauses the liability of the registered owner is governed by the
number of passengers that he is permitted to carry under the permit
issued in his favour under the Motor Vehicles Act, 1939 and thus his
liability is limited by the condition incorporated in the permit.

It would have been possible to levy higher tax on the appellant
F only if the words 'which the vehicle is permitted to carry' in item 4(2)
of Part A to the Schedule to the Act had been omitted. The Court
cannot ignore those words while construing the said item since it
relates to the levy of a tax. Moreover the provision in section 8 is
specific. It says that the additional tax shall be equal to the difference
between the tax already paid and the tax which is payable in respect
G of such vehicle for the period ·for which the higher rate of tax is pay-
able is consequence of its being altered or so proposed to be used in
such a manner as to cause the vehicle to become a vehicle in respect
of which a higher rate of tax is paybale.

There is another difficulty in applying section 8 to stray cases of
tI overloading. Additional tax is payable for the period during which the
M. NARASIMHAIAH v. DY. COMMR. TPT. [VENKATARAMIAH, J.J 19

vehicle is proposed to be used for a purpose which will attract a A
higher rate of tax. The rate of tax is fixed taking one quarter i.e. 3
months as a unit of time for taxation. Is it reasonably possible to
determine the higher rate of tax payable, if say, on two days in a
quarter there has been overloading of the vehicle for a few hours or
minutes? The problem of computation of additional tax becomes
difficult in such cases. B

There is another important circumstance which persuades us to
disagree with the construction placed by the High Court on the rele-
vant provision of taxation in the Act. The rate of taxation in this case
is not based on the number of passengers actually carried during any
period in a motor vehicle used as a stage carriage but it is related to C
' the number of passengers which the motor vehicle is permitted to
carry under the permit. If the number of the passengers carried
during any period is less than what is permitted, the registered owner
of the motor vehicle does not get any rebate. He has to pay the tax at
the rate determined by the number of maximum passengers men-
tioned in the permit even when the stage carriage is run without any D
passengers. When that is the position there appears to be no justifica-
tion to hold that the registered owner or whoever is liable to pay the
tax should be made to pay the additional tax merely because on some
stray occasions the motor vehicle is found to have carried a few more
passengers than the number permitted under the permit since the tax
is not levied on the basis of the number of passengers actually E
carried.

/ The decision in Payne v. A/lock, (supra) is clearly distinguishable
}
from the present case. In that case the appellant had paid the duty
(
?- under para 6 of the Schedule II to the Finance Act, 1922 which was a
residuary clause under which he had to pay £ 16 for taking out the F
licence for using his motor vehicle as a private motor car. But he was
found to be using the vehicle for the purpose of carrying goods for a
fairly long period which brought the vehicle under the Sth para of
that schedule which levied a higher rate of tax. In the case before us,
as we have already pointed out the vehicle could not be subjected to
a higher rate of tax under any other item in Part A to the Schedule to G
the Act.

The argument urged on behalf of the State Government that
the liability of the registered owner to pay tax in respect of a stage
carriage depends upon the number of passengers carried in a vehicle
on a given date does not appeal to us because in that event the words H
20 SUPREME COURT REPORTS [1988] 2 S.C.R.

A 'which the vehicle is permitted to carry' in item 4(2) become mean-
ingless and ineffective. The High Court in Noorullha Khan's case
(supra) overlooked the presence of the words 'which the vehicle is
permitted to carry' which are found in clause (b) of item 7 of the Act
also. It is no doubt true that it is not in the public interest that a
B registered owner of a motor vehicle should be allowed to carry more
passengers than the maximum number of passengers that he is
allowed to carry under his permit and such a tendency on the part of
any registered owner should be checked. That fact, however, cannot
be relied upon for the purpose of construing the items in Part A of
the Schedule to the Act liberally and in favour of the State Govern-
ment. It is needless to say that a law which imposes a tax should be
C construed strictly. If the action on the part of the registered owner is
contrary to the provisions of the Motor Vehicles Act, 1939 there is '
sufficient provision in that Act to take appropriate action against him
and either to cancel the permit or to suspend it.

D In the instant case we feel that when a registered owner of a
motor vehicle which is permitted to be used as a stage carriage cannot
be asked to pay additional tax under section 8 of the Act merely
because he has carried on some occasions more passengers than the
maximum number of passengers that he is permitted to carry under
the permit. The tax which he is liable to pay is limited by the
E maximum number of passengers he is entitled to carry under the ·"I
permit. We, therefore, do not agree with the decision of the High
Court in Noorullha Khan's case (supra). We overrule it. The judg- .-
ment of the High Court against which this appeal is filed is liable to
be set aside. It is accordingly set aside. The respondents are directed \
<
not to levy additional tax on the appellant under section 8 of the Act
for carrying more passengers than what he was permitted to carry on ~
F
some occasions during the period in question. But we however y
impress upon the authorities the need to enforce the provision in sec-
tion 60 of the Motor Vehicles Act, 1939 strictly.

The appeal is accordingly allowed. No costs.

S.L. Appeal allowed.