MALWA BUS SERVICE (P) LTD. versus STATE OF PUNJAB & OTHERS

Citation: [1983] 2 S.C.R. 1009 · Decided: 28-04-1983 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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1009 
MALWA BUS SERVICE (P) LTD. 
v. 
STATEOF·PUNJAB & OTHERS 
April 28, 1983 
(A. P. SEN AND E. S. VENKATARAMIAH, JJ.] 
Motor Vehicles Act-Punjab ,\-ftJtor Vehicles Taxation Act, 1924- (as 
amended by the Amendment of 1981). 
Section 3 and 3A.;.....Maxi1num lindt of tax payable on certain types of 
motor vehicles raised from tin:e to time-Amendment Act of 1'981 raised'the 
maximum limit to Rs. 35,000 in respect of stage carrioges-Tax-Whether expro-
pdatory-Whether Imposes an unreasonable restriQtion onfreedcnt nftrade, con1-
n1erce and intercoutse within tlte State. 
By a notification issued under section 3A of the Punjab Motor Vehicles 
and Taxation (Atµendment) Act, 1981 the State Government imposed on every 
stage carriage plying for hire and use for the transport of passengers a sun1 of 
Rs. 500 per seat subject to a maximum of Rs. 35,000 irrespective of the distance 
over which it operated daily. 
The petitioners, in their petitions under Article 32 of the Constitqtion, 
contended that the tax was expropriatory and not compensatory in character 
and was being collected by the State Governmc:nt for augmenting its general 
reVenues which is forbidden by 'the Constitution, and that the levy was an 
unreasonable restriction on the freedom of trade, co1nn1erce and intercourse 
within the State. 
Dismissing the petitions, 
• 
HELD : The impugned tax is con1pensatory in nature and does not 
contravene Articles 301 and 304(b) of the Constitution. [!023 H] 
The mandate of Part XlII of the Constitution is not that trade, commerce 
and intercourse should be absolutely free, i.e., subject to no law and no taxes 
at all. Trade, commerce and intercourse should pay their way, that is, the price 
for the facilities provided by the State in the form of roads, bridges and many 
other facilities. Therefore, there is nothing inconsistent with the conception of 
freedom of trade and commerce if in truth what is collected by way of tax is a 
pecuniary charge which is compensatory in character: What is essential is that 
the bufden shou]d not disproportionately exceed the cost of faciiities provided 
by the. State. It is not unreasonable to ask the owners of the motor vehicles 
to contribute towards the cost .of maintenance of roads as they happen to belong 
10 a class having a special and direct benefit of the facilities provided. Court& 
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1010 
SUPREME CoURT REPORTS 
(1983) 2 S.C.R. 
-have the power to decide whether what is recovered, by way of tax is in truth 
3.nd substance either a contribution to Hards· the construction and maintenance 
of roads and bridges and other facilities necessary for smooth transport service --¥ 
or an exaction in excess of what is needed for this purpose.· TheY cannot, ' 
· however, insist upon an exact correlation. between the tax recovered and the 
cost so incui-red because such eiaCt correl3.tion is in the very nature of things 
impossible to attain. In the case of fee if at· least a good and substantial 
portion (two-thirds or three.fotirths) colle-cted . is shown _with reasonable 
certainly to have been spent for rendering services to those from whom fees 
were co1lected~ the Courts have upheld the levy., In la\v, there cannot be much 
difference between this principle applicable to fees and the principle that_ ought 
to govern the levy of motor vehicles tax which is claimed to be of a compen-
satory character. [1020H. 1021 A-H, 1023 F-G] 
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, __....
Kewal Krishan Puri & Anr. v. State of Punjab · &.. Ors., [1?79t 3 S.C.R. 
1217; referred to. 
The petitioners have riot plaCed before the Court sufficient material to 
hold that the ievy· suffered from the vice of discrimination. It _is well settled 
that a legislature, in order to 
ta~ some need not tax all. It can adopt a 
. ·reasonable qualification of persons and things in iniposing tax liabilities. 
Unless a fiscal law is manifes~ly discriminatory the Cot.irt 'should refrain from 
striking it down· on the groun~ of discrimination. ,, [1025 B, 1024 E-F] 
In the instant case stage carriages which travel on ai:i aver3.ge about 
260 Km every day ~ith an 'almost assuri::d quantum of traffic, beiong to a class 
distinct and separate from public carriers which carry ·goods on undefined 
routes. The amount-of wear 3.nd tear caused to the roads by any class of 
motor vehicles may not always be a ·determining factor in classifying motor 
. vehicles for the purposes of taxation. [1024 G-H, 1025 A] 
, 
Merel:

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