STATE OF KARNATAKA & ORS.versusN. MADAPPA AND ORS. ETC.

                   STATE OF KARNATAKA & ORS.                                     A
                                      v.
                     N. MADAPPA AND ORS. ETC.

                               MAY 2, 1996
                                                                                 B
           [K. RAMASWAMY AND G. B. PATTANAIK, JJ.]

     Kamataka Motor Vehicles Taxation Act, 1957 (As amended by Act 14
of1989):

      · S.3(4)-Levy of tax at enhanced rates on excess passengers-Govem-         c
ment of Kamataka levying additional tax at specified rates on Vehicles
canying 011 passengers in excess of pennitted capacity of the vehicle-Held,
power of State Govemment to levy tax at enhanced rate on excess passengers
Oil findillg the vehicle to be overloaded in excess of prescribed limit is not

consistent lVith the schenie under s.lr-A111endment is not valid in law.
                                                                                 D
      Constitution of lndia, 1950:

        Seventh Schedule, List 11, Ellfry 57, List Ill, Entry 35--Taxes Oil
Vehicles-held, there is no law made by parliament occupyillg the field under
Entry 35 of List JI!, therefore State legislature has power Ullder Entry 57 of E
list II to make law levying tax Oil vehicles-However, sub-section (4) of s. 3
as inserted by Act 14 of 1989 in Kamataka Motor Vehicles Act, 1957 providing
for additional tax on vehicles canyillg Oil passengers in excess of pennitted
capacity of the vehicle is not consistent with the scheme under s.8 of the
p1incipal Act and as such the antend1nent is not valid in law.
                                                                                 F
      Narasimhaiah v. Dy. Commissioner for Transport, [1987] Supp. SCC
452 relied on.

      Automobile Transport (Rajasthan) Ltd. Etc. v. State of Rajasthan &
Ors., AIR (1962) SC 1406, referred to.                                           G
     CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8843-
8850 of 1996 Etc.

     From the Judgment and Order dated 18.10.90 of the Karnataka High
Court in W .P. No. 14029-036 of 1989.                                            H
                                   291
    292                      SUPREME COURT REPORTS [1996[ SUPP. 2 S.C.R.

A           M. Veerappa for the Appellants.

            Mrs. Kiran Suri for the Respondents.

            The following Order of the Court was delivered :

            Delay condoned.
B
            Leave granted.

            We have heard learned counsel on both sides.

            These appeals by special leave arise against the judgments dated
c 18.10.1990 and 18.2.1991 of the Division Bench of the High Court of
    Karnataka made in W.P. Nus. 14029-036/89 and 159/9 I. The appdlant had
    introduced by the Karnataka Motor Vehicles Taxation (Amendment) Act
    14 of 1989, sub-section (4) of Section 3 which reads as under:

                 "Amendment of Section 3: After sub-Section (3) of Section 3 of
D                the Karnataka Motor Vehicles Taxation Act, 1957 (Karnataka Act
                 35 of 1957) (hereinafter referred to as the principal Act), the
                 following shall be inserted, namely :

                 (4) Notwithstanding anything contained in sub-section (1) and (2),
E                a special additional tax at the rates specified in Part-D of the
                 Schedule shall be levied on motor vehicle suitable for use on roads
                 carrying passengers or goods in excess of the permitted capacity
                 of the vehicles.

                 (5) Insertion of new part 'D' alter Part 'C' and before the Explana-
F                tion, the following shall be inserted, namely :

          Item            Class of Vehicle             Special additional tax for
           No.                                       each occasion on which such
                                                           excess is carried.
                     -
                                                              Rs.          Ps.
G                  Passenger vehicles carrying
           1.
                   passengers in excess of the
                   permitted capacity, for every
                   such excess passenger.                          20-00
           xx                     xx                                 xx
H                                      -                -                  - .
                           STATE v. N.MADAPPA                                 293

         (G) In the Explanation, in paragraph (3) after the words A
         'Corporation', the \VOrds 'Or a Bank or a Board or a Co-operative
         Society or such other institution as may be notified by the State
         Government in this behalf shall be inserted.

         8. Power to remove difficulty - If any difficulty arises in giving effect
         to the provisions of the Principal Act, as amended by this Act, the         B
         State Government may, by Notification in the official gazelle make
         such provisions as may appear to it to be necessary or expedient
         for removing the said difficulty.

            Provided that no such order shall be made after the expiry of            C
         a period of two years from the date of commencement of this Act."

       The respondents have challenged the validity of the above provisions.
The Division Bench had held the State Government is devoid of power to
levy tax at the enhanced rate on the passengers. It followed the ratio laid
down by this Court in Automobile Transport (Rajasthan) Ltd. Etc. v. State            D
of Rajasthan & Oi:>., AIR (1962) SC 1406 and held that there is no
competence of the State Legislature to enact sub-section ( 4) except to
enforce Section 60 of the Motor Vehicles Act (4 of 1939) which is
equivalent to Section 86 of the 1988 Act to levy tax on extra passengers
and goods.                                                                           E

        The question, therefore, is: whether the State legislature is competent
to enact law to levy tax on excess passengers carried by the holder of a
permit under the Motor Vehicles Act? On an earlier occasion, when the
State had amended Section 8 an armed itself with power to levy additional
tax, it came to be challenged. Ultimately, this Court in M. Narasimhaiah v.          F
Dy. Commissioner for Transp01t, [1987] Supp. SCC 452 held that having
regard to the power to levy the tax on the capacity of the vehicle deter-
mined under Entry 4 of the Schedule A read with Section 8 of the Act and
the rates prescribed thereunder the State Legislature has no power to
impose adc!itional tax on excess passengers. While considering that qucs-            G
tion this Court in para 10 held thus :

        "10. There is another difficulty in applying Section 8 to stray cases
        of overloading. Additional tax is payable for the period during
        which the vehicle is proposed to be used for a purpose which will
        attract a higher rate of tax. The rate of tax is fixed taking one H
    294                      SUPREME COURT REPORTS [1996J SUPP.2 S.C.R.

A               quarter i.e., 3 months as a unit of time for taxation. Is il rea~onably
                       1

                possible lo determine the higher ralc of tax payable, if, say, on lwo
                days in a quarter, there has heen overloading of the vehicle for a
                few hours or minutes'? The problem of computation of additional
                tax becomes difficult in such cases."

B         It is true that under Entry 57 of List II of the Seventh Schedule to
    the Constitution, the State Legislature has power lo tax on vehicles,
    whether mechanically propelled or not, suitable fur use on roads subject
    to the provisions of Entry 35 of List lll. There is no law made by the
    Parliament occupying the licld under Entry 35 of List IJI. Therefore, the
C   Stak Legislature has power under Entry 57 to make law levying tax on
    vehicles.

           ll is seen that under Schedule A read with Section 8, lhe State
    Legislature has already levied tax on lhe basis of the capacity of the
    passengers carried in the motor vehicle as per the pcrn1it issucd there-
D   under. Having had that power the question emerges: \Vhcthcr the State
    Legislature can levy tax on excess passengers un each of th~ occasion when
    the enforcing officers found the vehicle to have been overloaded'! The
    concept of tax on vehic!~ is not for a single day or an hour when the
    passengers were found to be in excess of the limit prescribed under the
    permit. The power to levy the tax is on the basis of the user of the vehicle
E   for the quarter under the Act. U ndcr those circumstances, the power to
    levy tax under the amended sub-section (4) of Section 3 read with Schedule
    D on excess passengers obviously on each occasion of overloading appear~
    to be unsustainable. Under those circumstances, the power to levy tax at
    the enhanced rate on the excess passengers on finding the vehicle to be
F   overloaded in excess of the prescribed limit, appears to be not consistent
    with the scheme under Section 8 of the Act. Therefore, though for different
    reasons, we hold that the amendment is not valid in law.

           The appeals are accordingly dismissed. No costs.

    R.P.                                                          Appeals dismissed.