MAHARAJA TOURIST SERVICE ETC. ETC. versus STATE OF GUJARAT

Citation: [1991] 2 S.C.R. 524 · Decided: 26-04-1991 · Supreme Court of India · Bench: RANGANATH MISRA · Disposal: Disposed off

Judgment (excerpt)

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MAHARAJA TOURIST SERVICE ETC. ETC. 
v. 
STATE OF GUJARAT 
APRIL 26, 1991 
[RANGANATH MISRA, CJ AND KULDIP SINGH, J.) 
Constitution of India, 1950: Articles 19( 1) (g), 301-Levy of 
additional tax under Motor Vehicle Tax Acts of different States-
Validity of 
Motor Vehicles Act, 1939/1988/Motor Vehicle Tax Acts-Section 
63(7)/88(9)-Motor Vehicle Tax Acts, Punjab, Gujarat, Rajasthan and 
Madhya Pradesh-Additional Tax-Constitutional validity of 
Punjab Motor Vehicles Taxation Rules 1925 Rule 8(v )- _ 
Exemption to vehicles registered outside the State and kept in the State 
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upto 30 days-Expression 'kept for use'-Scope of-Kept for more 
than 30 days for regular use-Not by way of transit-Exigibility of 
tax-To be determined in individual cases as and when raised. 
Words and phrases: 'kept for use'-Meaning of. 
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Under the trucing power contained in the several Motor Vehicles 
Tax Acts in vogue in the Respondent-States, provision bas been made 
for taxation as also for levy of additional true. The petitioners who hold 
All India Tourist Permits challenged the constitutional validity of the 
additional tax, on the ground that it was neither compensatory nor 
regulatory, and therefore was violative of Articles 19(1)(g) and 301 of 
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the Constitution. In respect of the States of Punjab and Haryana which 
have a common Act, an additional contention. was raised to the effect 
that Rule 8(v) of the Punjab Motor V•hicles Taxation Rules 1925, 
provides total exemption from liability of tax if the vehicle was brought 
into the State and kept for use within the State for a period not exceed-
ing 30 days in a year, and since the vehicles registered outside Punjab 
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and Haryana States are not kept within the State for more than 30 days 
in a year, the demand of tax in the face of Rule S(v) is contrary to law. 
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Disposing of the Writ Petitions, this Court, 
HELD: 1. Law is settled that to uphold levy of tax as in the present 
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case, what is necessary is existence of a nexus between the subject and 
524 
M.T.S. v. STATE OF GUJARAT 
525 
the object of the levy and it is not necessary to show that the whole or a 
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substantial part of the tax collected is utilised. Hence the demand of tax 
is not open to challenge and the plea raised against the levy, whether of 
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tax or additional tax, in not justified. Under the taxing provision a 
statutory outer limit has been provided and the actual amount is left to 
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be determined by the State Government by notification. Obviously, 
discretion is left with the State Government to' demand at a rate which 
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in a given situation would be justified. Once it is held that the tax is 
either compensatory or regulatory that forms the guideline for the State 
Government to keep in view to determine the rate at which within the 
upper limit fixed by law the demand has to be made. [525E-H] 
Automobile Transport (Rajasthan) Ltd. v, The State of Rajasthan 
and Ors., [1963] I SCR 491; Mis. International Tourist Corporation 
and Ors. v. Staie of Haryana and Ors., [1981] 2 SCC 318 and B.A. 
Jayaram and Ors. v. Union of India and Ors., [1984] 1 SCC 168, relied 
on. 
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2. The word 'kept' has not been defmed in the Punjab Motor 
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Vehicles Taxation Act, 1924. It must, therefore, be interpreted in its 
ordinary popular sense consistent with the context. The ordinary dictio· 
nary meaning of the word 'keep' is 'to retain', 'to maintain' or 'cause to 
stay or remain in a place' or 'to detain' or 'to stay or continue in a 
specified condition, position etc.'. It is something different from a mere 
state of transit or a course of journey through the State. It is something 
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more than a mere stoppage or halt for rest, food or refreshment, etc. io 
the course of transit through the territory of the State. That being the 
postition, rule 8(v) which uses the term 'kept for use' may not cover a 
case of bare transit and in terms of the rule exemption is available for 
vehicles kept upto 30 days in a year. In that view of the matter tourist 
vehicles registered outside the State of Punjab and Haryana when 
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brought into these two States for regular use and not by way of transit 
and when used for more t'ian 30 days in a rear would attract taxability; 
otherwise the exemption provision in rule 8(v) would be available. [530C·F] 
Mis. International Tourist Corporation and Ors. v. State of 
Haryana and Ors., [1981] 2 SCC 318 and State of Mysore and Ors. v. 
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Mis T. V. Sundaram Iyengar & Sons (

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