A division bench of the Supreme Court has upheld the levy of special road tax on transport vehicle without permit under section 3-A introduced vide the Himachal Pradesh Motor Vehicles Taxation (Amendment) Act holding that the same was within the legislative limits of the State Government.
Earlier, the High Court, though upheld the power of the State legislature to enact provisions for levy of special road tax under Sections 3-A(1)(2)(4), but at the same time erred in holding the provisions under Section 3-A(3) to be ultra vires being unconstitutional.
Justice Sanjay Kishan Kaul, Justice Abhay S. Oka and Justice Vikram Nath observed that “a careful perusal of the above orders confines the question for consideration to be whether the imposition of additional special road tax levied on transport vehicle used without a valid permit is not a tax but a penalty and is ultra vires the legislative powers of the State Legislature under Entries 56 and 57 of List II (the State List) of the Seventh Schedule to the Constitution.”
Overruling the High Court judgment, the Apex Court held that “For all the reasons recorded above, the validity of Section 3A(3), in our opinion, has been wrongly held to be ultra vires by the High Court. The tax imposed under Section 3A(3) is regulatory in character and is not a penalty.”
The High Court had also quashed the notifications issued by the State for levy of the taxes under Section 3A(3) holding that lumpsum taxes could not be levied on general assessment and it had to be levied as per actual default.
Noting that the levy of lumpsum tax has been upheld by a three Judge Bench of the Supreme Court in the case of State of Tamil Nadu vs. M. Krishnappan and Anr, the Court held that “We find no reason to take a different view. It may also be noted that the learned Amicus Curiae has also not advanced any arguments on this point.”
“In view of the above, it would not be a futile exercise to send the matters back to the regular Bench as we have held that said Section 3A(3) of the 1972 Act being within the legislative competence of the State Legislature, and lumpsum tax could be levied. Nothing further remains to be examined by the regular Bench in these appeals,” the Court observed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
