STATE OF TAMIL NADU versus M. KRISHNAPPAN AND ORS.

Citation: [2005] 2 S.C.R. 1112 · Decided: 18-03-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
ST A TE OF TAMIL NADU 
v. 
M. KRISHNAPPAN AND ORS. 
MARCH 18, 2005 
B 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
Motor Vehicles : 
C 
Tamil Nadu Motor Vehicles Taxation Act, I974 (As amended by Act 271 
98)-Sections 4(I-A)(a), 2 and 3 rlw Schedule Ill, Part-I. 
Levy of "life time tax" in lump sum in advance on motor vehicles 
registered on and after I-7-I998-0n basis of new index of "weight-cum-
value" of the vehicle-Validity-Held, the new index maintains a nexus with 
D the essential character of the levy, hence, does not make the levy lose its 
regulatory and compensatory character-State competent to levy the tax under 
Entry 57, List Il of the Seventh Schedule to the Constitution-Constitution of 
India, I950-VII Schedule-List II, Entry 57. 
E 
Levy of "life time tax" on motor vehicles registered on ar~d after I-7-
I998 on basis of "weight-cum-value" of the vehicle-Imposition of higher tax 
on vehicles owned by "others" vis-a-vis the vehicles owned by "individuals" 
in Part-I of the Third Schedule-Challenge to-Held, the impost does not 
violate Article I 4 of the Co;istitution-Levy of life-time tax is based on rational 
and reasonable classification founded on intelligible differentia-Constitution 
F of India, I950-Article 14. 
By the Amending Act 27 of 1998, Section 4(1-A)(a) came to be 
inserted in the Tamil Nadu Motor Vehicles Taxation Act, 1974 which 
imposed a one time payment of"life time tax" in advance on motor vehicles 
registered on and after 1.7.1998, the date on which the said amending Act 
G came into force. The tax was made leviable on the basis of "weight-cum-
value" of the vehicle. The impost was challenged as unconstitutional, 
discriminatory and arbitrary besides being inconsistent with the scheme 
of 1974 Act. The High Court held that by introducing 'value' as an index, 
the tax has ceased to be compensatory and consequently the levy fell 
H 
1112 
-
STA TE OF TAMIL NADU v. M. KRISHNAPPAN 
1113 
outside Entry 57 of List II of the Seventh Schedule to the Constitution, A 
which in turn attracted Article 265 of the Constitution resulting in levy 
and collection of tax without the authority of law. Hence the present 
appeals by the State. 
Allowing the appeals, the Court, 
HELD : 1. The impugned levy of life time tax is based on rational 
and reasonable classification founded on an intelligible differentia having 
a rational relation to the object of the levy. It is also not discriminatory, 
arbitrary or unreasonable so as to violate Article 14 of the Constitution. 
B 
(1127-C; 1125-Fl C 
Anas v. State of Kera/a, (1999) 3 KLT 147, approved. 
2. The State maintains old roads and makes new ones. These roads 
are at_ the disposal of those who use motor vehicles either for private 
purpose or for trade or commerce. The State has to find funds for making D 
new roads and for maintenance of those that are in existence. The 
impugned tax is regulatory and compensatory in nature in the sense that 
it is imposed to meet the increasing costs of maintenance and upkeep and 
to that extent it is not plenary. (1123-F-G] 
Automobile Transport (Rajasthan) Ltd. etc. v. State of Rajasthan and E 
Ors., AIR (1962) SC 1406, referred to. 
3. The "life time tax" is a one time payment spread over the economic 
life of the vehicle. The said tax is based on time, use and maintenance of 
the roads. Any standard, which maintains a nexus with the essential 
character of the levy can be regarded as a valid basis for assessing the F 
measure of the levy. The index of"weight-cum-value" maintains the nexus 
with the essential character of the levy in question and, therefore, the High 
Court erred in holding that by introduction of the value of the vehicle as 
a parameter, the levy ceases to be regulatory and compensatory in nature. 
(1124-B-CJ G 
Union of India and Ors. v. Bombay Tyre International Ltd, AIR (1984) 
SC 420, relied on. 
· 
4.1. Throughout the Constitution, the legislative power relating to 
taxes and the legislative power relating to general subjects is treated H 
1114 
SUPREME COURT REPORTS 
[2005] 2 S.C.R. 
A separately and is not subsumed under a general head. Entry 57 of List-II 
of the Seventh Schedule to the Constitution refers to taxes on vehicles 
suitable for use on roads. When the Constitution provides a field of 
legislation, it has to be read in the broadest possible terms. When the State 
is empowered to levy tax on the vehicle, it is empowered to levy tax on 
B every aspect of the vehi
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