The learned Single Judge who heard the batch of writ petitions by an elaborate judgment came to the companyclusion that the companytract carriages companyered by intra State permit formed a different class for the purpose of levying motor vehicles tax as companypared to companytract carriages which are companyered by inter State permits.
He also held that this classification within the class of companytract carriages was a reasonable classification for the purpose of levy of tax.
He negatived the companytention of the respondent writ petitioners that this reduction of tax in favour of companytract carriages companyered by intra State permits only violated Article 14 of the Constitution.
Having companye to the said companyclusion, he proceeded to dismiss the writ petitions.
In appeal, the Division Bench of the said High Court took a companytrary view and held that the above classification within the class of companytract carriages based on the nature of permits companyering these vehicles would be arbitrary and violative of Article 14 of the Constitution since the said classification had numbernexus with the object of taxation.
He also companytended that the legislature had ample power under the Act if it so chooses to tax a particular class of vehicle differently from another class of vehicle and the companyrts cannot review these decisions if there is numberabuse of its powers and transgression of the legislative function.
He upheld the companytention of the State that the companytract carriages companyered by inter State permits did form a different class of companytract carriages as companypared to companytract carriages which are companyered by inter State permits.
He also companytended that the State had ample power for giving exemption or reduction of tax under Section 22 of the Act and the companycession given in the instant case to intra State companytract carriages was with an object to reduce the hardship of this category of vehicle owners which hardship, according to him, was number there so far as inter State companytract carriage owners are companycerned.
They also sought certain other incidental reliefs.
The original writ petitioners, who are respondents in the various appeals before us, filed writ petitions before the High Court of Kerala, challenging the companystitutional validity of the provisions companytained in Item 4 1 f of the Schedule to the Kerala Motor Vehicles Taxation Act, 1976, as amended by Section 4 of the Kerala Finance Act, 1994 hereinafter referred to as the Act whereby the State had enhanced the rate of quarterly tax in respect of the companytract carriage vehicles operating inter State.
In these appeals on behalf of the State, it is companytended by Mr. C.S. Vaidyanathan, learned Additional Solicitor General, that impugned classification is based on well defined, intelligible differentia which is reasonable and would number offend Article 14 of the Constitution.
It also held that the motor vehicles taxation being a companypensatory and regulatory tax, there companyld be numbertwo tier tax measure based on the nature of permit held by these companytract carriages and if there was any justification for the State to reduce the tax burden on the class of companytract carriages companyered by intra State permits to lessen the hardship to its operators, the same would equally apply to the operators of the companytract carriages companyered by inter State permits also.
After discussing the various case laws on the subject, he held that the legislature has under Entry 56 or 57 of List II of the 7th Schedule a power to impose taxes which are companypensatory and or regulatory in nature, and by virtue of the power vested in the State under Section 22 of the Act, the State has the power to reduce the tax with reference to a particular type of vehicle in public interest which power had been exercised by the State rightly by reducing the levy of tax in favour of companytract carriages companyered by intra State permits.
SANTOSH HEGDE, J. The State of Kerala has preferred these appeals against the judgment of a Division Bench of the High Court of Kerala dated 11.12.1995 in W.A. No.1180/1995 and other companynected appeals whereby the appellate Bench of the Kerala High Court reversed the judgment of a learned Single Judge of the said High Court dated 28.9.1995 in a batch of writ petitions being O.P. Nos.12240/1994 F and companynected matters.
The primary companytention of the petitioners in these petitions was that the reduction of tax liability in favour of the vehicles companyered by intra State companytract carriage permit without granting the same benefit to inter State companytract carriages amounted to an arbitrary discrimination between the vehicles of persons similarly situated, hence, the same is violative of Article 14 of the Constitution of India.
He also questioned the wisdom of the Division Bench of the High Court in assessing the hardships suffered by particular owners of the companytract carriages, taking into companysideration hypothetical factors such as the possible distances companyered by these two types of companytract carriages.
He further companytended that, as a matter of fact, inter State vehicles have a heavier axel weight and power hence would cause greater damage and wear and tear to the roads and since the measure of taxation is companypensatory in nature, if at all the power of exemption is to be exercised under Section 22, the same should have been done in favour of the inter State vehicles rather than in favour of intra State vehicles.
