By Our Legal Correspondent
NEW DELHI, MARCH 28. The Supreme Court has held that the States are empowered to levy "lifetime tax" in advance in lump sum at the time of registration of new motor vehicles based on their cost price.
A three-Judge Bench, comprising Justice S.N. Variava, Justice A.R Lakshmanan and Justice S.H. Kapadia, gave this ruling while allowing an appeal filed by the Tamil Nadu Government against a judgment of the Madras High Court striking down the scheme of levying one-time tax based on the vehicle's "weight-cum-value."
A batch of petitions were filed in the High Court by M. Krishnappan and others challenging the levy as unconstitutional, discriminatory, arbitrary and violative of Article 14 of the Constitution. The main challenge was on the ground that the tax could be only on the basis of the vehicle's unladen weight and not on the value of the vehicle as such a tax was compensatory in nature for the use of public road; that the wear and tear of such roads were maintained by the State. After the High Court struck down such a levy, the Tamil Nadu Government filed a special leave petition seeking to quash the judgment.
Allowing the appeal, the Bench said: "For administrative reasons in the matter of collection of tax, a one-time payment of tax is administratively convenient and at the same time, it is also beneficial to the users of the vehicles who do not have to go to the office of the RTO every year to pay the annual taxes. It is also beneficial to the users of motor vehicles as they do not have to pay taxes at the increased rates from time to time over the economic life of the vehicle."
Mr. Justice Kapadia writing the judgment said that the levy of lifetime tax was based on rational and reasonable classification founded on an intelligible differentia having a rational relation to the object of the impugned levy. "The said tax is based on time, use and maintenance of the roads," the Bench noted and said the State Legislature was empowered to impose tax on every aspect of the vehicle.
The Judges agreed with the State Government's contention that weight alone could not be the criterion for levying a tax on the new vehicles and said that a Honda CRV car weighing 1,500 kg was priced at Rs. 15.24 lakhs while a Tata Indigo, weighing 1,490 kg, cost Rs 5.08 lakhs. If weight alone was taken as the criterion, then both the vehicle owners would have to pay almost the same road tax, which would create an anomalous situation, the Bench said. "In these circumstances, we reiterate that introduction of weight-cum-value index will not make the levy non-regulatory/non-compensatory."
© Copyright 2000 - 2008 The Hindu