ALL KERALA DISTRIBUTORS ASSOCIATION, KOTTAYAM UNIT, REPRESENTED BY ITS SECRETARY VERSUS THE STATE OF KERALA & ANR.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4502 OF 2009

ALL KERALA DISTRIBUTORS ASSOCIATION,

KOTTAYAM UNIT,

REPRESENTED BY ITS SECRETARY APPELLANT(S)

VERSUS

THE STATE OF KERALA & ANR. RESPONDENT(S)

WITH

CIVIL APPEAL NO. 878 OF 2010

CIVIL APPEAL NO. 879 OF 2010

J U D G M E N T

A.M. KHANWILKAR, J.

1. These appeals involve challenge to the constitutional validity of

sub-sections (7) and (8) of Section 4 [introduced by way of the Kerala

Motor Vehicles Taxation (Amendment) Act, 2005 1

in the Kerala

1 for short, “the Amendment Act”

Motor Vehicles Taxation Act, 19762

], Section 15 of the 1976 Act and

Section 8A of the Kerala Motor Transport Workers’ Welfare Fund Act,

19853

inserted by Act 23 of 2005.

2. The thrust of the challenge is on the ground that the State

Legislature by way of stated amendments to the welfare legislation

has effectively bootstrapped the obligation to make contribution to

the workers’ welfare fund with the obligation to pay tax for operating

motor vehicles. In other words, the welfare legislation is intertwined

with the compensatory legislation by the impugned Amendment Act

of 2005 and together they substantially encroach and override the

relevant provisions of the Central legislation i.e., the Motor Vehicles

Act, 19884

to paralyse the Stage and Goods Carriage Operation or to

undermine the effectiveness of the transport permit provided under

the 1988 Act.

2 for short, “the 1976 Act”

3 for short, “the 1985 Act”

4 for short, “the 1988 Act” or “the Central Act”, as the case may be

3. The 1976 Act was enacted by the State Legislature when the

erstwhile Motor Vehicles Act, 19395 was in force. It was so enacted

under Entry 56 (Taxes on goods and passengers carried by road or

on inland waterways) and Entry 57 (Taxes on vehicles, whether

mechanically propelled or not, suitable for use on roads, including

tramcars subject to the provisions of entry 35 of List III) of List II of

the Seventh Schedule to the Constitution. Section 15 of the 1976

Act postulates that non-payment of tax due in respect of a transport

vehicle within the prescribed period would render the transport

permit for such vehicle ineffective from the date of expiry of the said

period until such time as the tax is actually paid. The State of Kerala

had sought Presidential assent for the 1976 Act and the same was

granted on 25.3.1976. However, in due course, the 1939 Act was

repealed by the Parliament and it was replaced by the 1988 Act,

introducing a new regime to consolidate and amend the law related

to motor vehicles. This Act (the 1988 Act) was enacted by the

Parliament under Entry 35 of List III (Mechanically propelled

5 for short, “the 1939 Act”

vehicles including the principles on which taxes on such vehicles are

to be levied). Chapter V of the 1988 Act deals with control of

transport vehicles, including the procedure of Regional Transport

Authority in considering application for stage carriage permit and

the duration and renewal of permits. According to the appellants,

the 1988 Act exhaustively covered all aspects of grant, control and

validity of transport permits. Further, the State of Kerala did not

seek Presidential assent in respect of the State Act i.e., 1976 Act,

after coming into force of the Central Act, despite the repugnancy

between the existing State Act and the newly introduced the 1988

Act.

4. Furthermore, in the year 2005, the State of Kerala amended

the 1976 Act and the 1985 Act thereby introducing sub-sections (7)

and (8) of Section 46

in the 1976 Act and Section 8A7 in the 1985

Act. The effect of these amendments is to mandate production of

6 4. Payment of tax and issue of license.-

(1) The Tax levied under Sub Section (1) of Section 3 shall be paid in advance with such period

and in such manner as may be prescribed, by the registered owner or person having possession

or control of the Motor Vehicle, for a quarter or year, at his choice, upon a quarterly or annual

licence to be taken out by him.

Provided that, in the case of fleet owner, the Government may direct that the tax shall be

paid in monthly instalments before such date, in such manner and subject to such conditions,

as may be specified in the direction:

Provided further that where the tax payable in respect of a motor vehicle other than a

motorcycle (including a motor scooter and cycle with attachment for propelling the same by

mechanical power) or a three wheeler as specified in items 1 and 2 of the schedule or a motor

car as specified in item 11 of the Schedule, for a year does not exceed Rupees one thousand five

hundred, the tax shall be paid yearly upon an annual licence:

Provided also that the registered owner, or person having possession or control of the

motor vehicle may, at his /her choice, pay the yearly tax payable under the second proviso in

advance for any period upto 5 years, upon a licence for such period:

Provided also that the registered owner, or a person having possession or control of a

motor cycle (including motor scooters and cycles, with attachment for propelling the same by

mechanical power) specified in item 1 of the Schedule or three wheelers (including tricycles and

cycle rickshaws with attachment for propelling the same by mechanical power) not used for

transport of goods or passengers specified in item 2 of the Schedule or a motor car specified in

item 11 of the said Schedule shall pay tax in respect of those vehicles in advance for a period of

two years in lumpsum upon a licence for such period.

Provided also that a registered owner or person liable to pay tax for a period of two years

in respect of motor vehicles specified in serial numbers 1 and 2 of the schedule may at his

choice pay tax in advance for any period exceeding two years at the rates specified in the

Schedule:

Provided also that the owner or a person liable to pay tax in respect of vehicles specified

in items 1,2,11 and 12 of the Schedule shall not be liable to pay any periodical increase in tax

for which he has paid tax for such vehicles.

Provided also that a registered owner or a person liable to pay tax for a period of two years

under the preceding proviso may, at his choice, pay tax in advance for a period of five years or

ten years or fifteen years in lumpsum upon a licence for such period.

Explanation:- (1) The tax for an annual licence shall not exceed four times tax for two years

licence shall not exceed eight times, tax for 5 years' licence shall not exceed twenty times, tax

for 10 years' licence shall not exceed forty times and tax for 15 years' licence shall not exceed

sixty times, the tax for a quarterly licence.

(1A) Notwithstanding anything contained in any other provision of this Act, 'year' in relation to

a motor vehicle in respect of which tax has to be paid yearly upon an annual licence in

pursuance of the second proviso to sub section (1), shall mean a period of twelve months

commencing on the first day of the quarter in which the vehicle has been or is, first registered

in the State and annual tax licence in respect of such a vehicle shall be taken accordingly:

Provided that if the tax in respect of a motor vehicle for any portion of the year so reckoned

has already been paid, the tax payable for the remaining period of that year shall be calculated

at the rate of one-twelth of the annual tax for each calendar month or part thereof.

Provided further that in the case of a motor vehicle in respect of which tax has to be paid

yearly upon an annual licence in pursuance of the second proviso to sub-section (1), the tax for

the period from the 1st day of April 1985, to the commencement of the year in relation to such

a vehicle shall be paid as if the Kerala Motor Vehicles Taxation (Amendment) Act, 1986 had not

been enacted.

(2) In the case of licence for a year or more, such rebate in respect of the tax, as may be

prescribed, shall be granted.

(3) When any person pays the amount of tax in respect of a motor vehicle used or kept for use

in the State of the vehicle by the Regional Transport Officer concerned that no tax is payable in

respect of such vehicle, the Taxation Officer shall-

(a) grant to such person a licence in the prescribed form: and

(b) record that the tax has been paid for the specified period, or that no tax is payable in

respect of that vehicle, as the case may be.

Provided that no licence shall be granted in respect of a motor vehicle, which is exempt

from payment of tax under sub-section (1) of Section 5.

(4) No motor vehicle liable to tax under Section 3 shall be kept for use in the State unless the

registered owner or the person having possession or control of such vehicle has obtained a tax

licence under sub-section (3) in respect of that vehicle.

(5) No motor vehicle liable to tax under Section 3 shall be used in the State unless a valid tax

licence obtained under sub section (3) is displayed on the vehicle in the prescribed manner.

(6) Notwithstanding anything contained in sub-section (1), no person shall be liable to tax during

any period on account of any taxable motor vehicle, the tax due in respect of which for the same

period has already been paid by some other person.

(7) Notwithstanding anything contained in any other provision of this Act, every registered owner

or person having possession or control of a motor vehicle in respect of a motor transport

undertaking liable to pay contribution under the Kerala Motor Transport Worker's Welfare Fund

Act, 1985 (21 of 1985) shall, before effecting payment of tax produce before the Taxation Officer

the receipt of remittance of the contribution towards welfare fund due upto the preceding month.

(8.) No tax under this Act shall be collected unless the receipt of remittance of contribution

towards welfare fund mentioned in sub-section (7) is produced.

7 8A. Production of receipt of remittance of welfare fund contribution.- Notwithstanding

anything contained in any other law for the time being in force every registered owner or person

having possession or control of a motor vehicle in respect of a motor transport undertaking

liable to pay contribution (other than autorickshaws covered under the provisions the Kerala

Autorickshaw Workers’ Welfare Fund Scheme, 1991) shall, at the time of making payment of

the tax under the Kerala Motor Vehicles Taxation Act, 1976 (19 of 1976) produce before the

receipt of remittance of welfare fund contribution at the time of

making payment of vehicle tax before the Taxation Officer. In this

context, it is urged that the amendment of 2005 effected by the State

legislation has effectively bootstrapped the obligation to make

contribution to the workers’ welfare fund with the obligation to pay

tax for operating motor vehicles, which are otherwise governed by

the permit issued under the 1988 Act. In the process, it undermined

the effectiveness of the permit so issued by the competent authority.

5. It is urged that the amendments to the 1976 Act as also to the

1985 Act, including Section 15 of the 1976 Act, are unconstitutional

as the entire field is already occupied by the Central Act of 1988,

with respect to permits to be issued for operating transport vehicles.

Thus, the provisions of the State Act(s) referred to above are

repugnant to the Central Act and that no Presidential assent had

been obtained by the State of Kerala despite the repugnancy with

the Central Act. Further, even if there is no direct conflict, the

Taxation Officer the receipt of remittance of the contribution to the fund upto the preceding

month.

impugned provisions in the State Act(s) are ultra vires for want of

legislative competence.

6. Notably, in the writ petitions filed before the High Court of

Kerala, challenging the stated provisions in the State enactments,

no relief or declaration was sought in respect of Section 8A of the

1985 Act. Moreover, the Division Bench of the High Court in the

impugned judgment noted that the counsel for the petitioner(s) had

given up the challenge to the validity of Section 15 of the 1976 Act.

Being conscious of this indisputable position, it is urged that there

can be no estoppel on legal questions or the concessions made by

the counsel on the question of law before the High Court. That

cannot come in the way of the appellants to pursue the challenge to

the impugned provisions before this Court.

7. Be that as it may, the Division Bench of the High Court

exhaustively considered the arguments canvassed on behalf of the

parties and on thorough scrutiny thereof, it negatived the challenge

vide impugned judgment dated 30.7.2007. The High Court opined

that the combined effect of sub-sections (7) and (8) of Section 4 and

Section 15 of the 1976 Act, is that if a clearance certificate is not

obtained from the Assessing Officer under the 1985 Act, the motor

vehicle tax would not be received by the Taxation Officer in

connection with the permit. As a consequence of which, the permit

would be rendered ineffective, disentitling the owner of a stage

carriage from operating his vehicle under such permit for the

relevant period.

8. The High Court further noted that the 1988 Act had been

enacted by the Parliament on subjects falling under Entry 35 of List

III which, however, did not cover the field concerning imposition and

the manner of recovery of vehicle tax. Section 81(1)8 of the 1988 Act

envisages that a permit other than a temporary permit issued under

8 81. Duration and renewal of permits.—(1) A permit other than a temporary permit issued

under section 87 or a special permit issued under sub-section (8) of section 88 shall be effective

from the date of issuance or renewal thereof for a period of five years:

Provided that where the permit is countersigned under sub-section (1) of section 88, such

counter-signature shall remain effective without renewal for such period so as to synchronise

with the validity of the primary permit.

…..

Section 879 or a special permit issued under sub-section (8)10 of

Section 88 shall be effective from the date of issuance or renewal

9 87. Temporary permits.—(1) A Regional Transport Authority and the State Transport

Authority may without following the procedure laid down in section 80, grant permits to be

effective for a limited period which shall, not in any case exceed four months, to authorise the

use of a transport vehicle temporarily—

(a) for the conveyance of passengers on special occasions such as to and from fairs and

religious gatherings, or

(b) for the purposes of a seasonal business, or

(d) pending decision on an application for the renewal of a permit,

and may attach to any such permit such condition as it may think fit:

Provided that a Regional Transport Authority or, as the case may be, State Transport

Authority may, in the case of goods carriages, under the circumstances of an exceptional nature,

and for reasons to be recorded in writing, grant a permit for a period exceeding four months,

but not exceeding one year.

(2) Notwithstanding anything contained in sub-section (1), a temporary permit may be granted

thereunder in respect of any route or area where—

(i) no permit could be issued under section 72 or section 74 or section 76 or section 79 in respect

of that route or area by reason of an order of a Court or other competent authority restraining

the issue of the same, for a period not exceeding the period for which the issue of the permit

has been so restrained; or

(ii) as a result of the suspension by a Court or other competent authority of the permit of any

vehicle in respect of that route or area, there is no transport vehicle of the same class with a

valid permit in respect of that route or area, or there is no adequate number of such vehicles in

respect of that route or area, for a period not exceeding the period of such suspension:

Provided that the number of transport vehicles in respect of which temporary permits are

so granted shall not exceed the number of vehicles in respect of which the issue of the permits

have been restrained or, as the case may be, the permit has been suspended.

10 88. Validation of permits for use outside region in which granted.—

…..

(8) Notwithstanding anything contained in sub-section (1), but subject to any rules that may be

made under this Act by the Central Government, the Regional Transport Authority of any one

region or, as the case may be, the State Transport Authority, may, for the convenience of the

public, grant a special permit to any public service vehicle including any vehicle covered by a

permit issued under section 72 (including a reserve stage carriage) or under section 74 or under

sub-section (9) of this section for carrying a passenger or passengers for hire or reward under a

contract, express or implied, for the use of the vehicle as a whole without stopping to pick up

or set down along the line of route passengers not included in the contract, and in every case

where such special permit is granted, the Regional Transport Authority shall assign to the

vehicle, for display thereon, a special distinguishing mark in the form and manner specified by

thereof for a period of five years. Whereas, the State Act i.e., the

1976 Act, came to be enacted under Entry 57 of List II of the Seventh

Schedule to the Constitution, which is solely concerned with tax on

vehicles whether mechanically propelled or not. Whilst, the 1985

Act is also a State legislation covered under Entries 23 and 24 of List

III for promoting the welfare of motor transport workers.

9. Dealing with the challenge to the validity of the stated

provisions in the State enactments, the Division Bench of the High

Court plainly opined that there was no lack of legislative competence

in the State Legislature and that the 1976 Act as well as the 1985

Act, fall substantially within the powers expressly conferred upon

the State Legislature which had enacted both the legislations,

including the Amendment Act of 2005. It further held that merely

because the 1976 Act had also dealt with a subject which falls under

Entries 23 and 24 of List III of the Concurrent List, it cannot be held

that the provisions of the 1976 Act are bad in law. To buttress the

the Central Government and such special permit shall be valid in any other region or State

without the countersignature of the Regional Transport Authority of the other region or of the

State Transport Authority of the other State, as the case may be.

…..

view taken by it, the High Court relied upon the exposition in

A.L.S.P.P.L. Subrahmanyan Chettiar vs. Muttuswami

Goundan11 ; Prafulla Kumar Mukherjee & Ors. vs. Bank of

Commerce Ltd., Khulna12; The State of Bombay & Anr. vs. F.N.

Balsara13; and M. Karunanidhi vs. Union of India14. The High

Court opined that the State enactments and the impugned

amendments substantially fall within the powers expressly conferred

upon the State Legislature and cannot be held to be invalid solely

because it incidentally touches upon another legislation. The

doctrine of pith and substance would clearly get attracted in the fact

situation of the present case. Whilst dealing with the argument of

the appellants that the right of appeal and review available to the

appellants under the 1985 Act would be curtailed, the High Court in

paragraphs 18 and 19 noted thus:

“18. Petitioners, as we have already indicated, have

raised a contention that because of the introduction of

sub-sections (7) and (8) to Section 4 of the Taxation Act,

11 AIR 1941 FC 47

12 AIR (34) 1947 PC 60

13 AIR 1951 SC 318

14 AIR 1979 SC 898

remedy of filing a review as well as appeal under Section

8 of the Welfare Fund Act has been effectively curtailed.

Sub-section (2) of Section 8 enables a person to file a

review petition before the authority who had determined

the arrears showing the detailed facts and reasons for

reviewing the original determination. Right is also

conferred on the aggrieved party if he is dissatisfied with

the order passed by the authority on the review petition

to file appeal before the District Labour Officer of the

concerned district. To maintain an appeal he need remit

only 50% of the amount demanded. The above right to

file review or appeal has been effectively taken away by

sub-sections (7) and (8) of Section 4 that is, only on

production of certificate of payment of contribution the

officer will accept tax. We have already indicated that a

Circular dated 16.06.2007 has been issued receipt of

50% of the contribution due under the Welfare Fund Act

enabling the aggrieved person to pay tax. Therefore an

aggrieved party who files an appeal on payment of 50%

of the contribution under the Welfare Fund Act is

entitled to get a certificate to that effect and on

production of that certificate before the taxing

authorities he would receive tax. Circular of course does

not deal with review petition. We therefore order that if

a properly constituted review petition is filed within the

prescribed time, and the same is pending the Chief

Executive Officer or any other officer appointed under

section 8 of the Welfare Fund Act that officer has to

issue a certificate to that effect and on production of that

certificate the taxing authority should receive tax under

the Taxation Act. The right to file a review petition as

well as an appeal is therefore effectively protected.

19. We therefore hold that sub-sections (7) and (8) of

Section 4 of Act 24 of 2005 is constitutionally valid; so

also Section 8A introduced under the Welfare Fund

(Amendment) Act. However, we hold if a review petition

filed under sub-section (2) of Section 8 as well as appeal

under Section 4 read with Section 7 is pending

consideration before the authorities concerned, they are

obliged to issue a certificate during the pendency of the

review petition and if an appeal is pending and pre

condition for filing appeal has been satisfied, certificate

has to be issued by the appellate authority and if those

certificates are produced before the taxing authority

they would receive tax under the Taxation Act. The writ

appeal and the writ petitions are disposed of

accordingly.”

10. In substance, the High Court has noted that the permit holders

were neither disputing their obligation to pay vehicle tax under the

1976 Act nor are they denying the obligation to pay contribution

towards the welfare fund under the 1985 Act. The purport of the

impugned amendments, including Section 15, was merely to ensure

that both these obligations are duly discharged so as to permit the

transport operators to continue with their business uninterrupted.

It is neither a case of levy of tax not permitted under the 1988 Act

nor deviating from the spirit of the said Act, which clearly predicates

that for grant of stage carriage permit, the Regional Transport

Authority is obliged to consider the satisfactory performance of the

applicant as a stage carriage operator, including payment of tax by

the applicant. The provision(s) in the State Legislation is not to

suspend the permit issued under the 1988 Act, but the expression

“ineffective” ought to be construed as enabling the permit holder to

avail of the permit only upon payment of vehicle tax under the 1976

Act, as amended from time to time. On this analysis, the High Court

rejected the challenge and dismissed the writ petitions and writ

appeals vide impugned judgment.

11. The appellants have assailed the view taken by the High Court.

It is urged by Mr. K. Parameshwar, learned counsel appearing for

the appellants that the Central legislation i.e., the 1988 Act,

occupies the entire field of permits and the said legislation is a selfcontained code as expounded by this Court in Hardev Motor

Transport vs. State of M.P. & Ors.15. He would submit that

Chapter V of the 1988 Act deals with all aspects of permits, including

their issuance, effectiveness, duration of validity, renewal, transfer

and penal consequences for any breach of conditions. Section 81(1)

of the 1988 Act envisages that the permit issued by the competent

authority shall be effective from the date of issuance or renewal

thereof for a period of five years. Once such permit is issued, the

same cannot be interdicted by a State legislation during its validity

15 (2006) 8 SCC 613 (paras 4, 11 and 12)

period. Section 8216 of the 1988 Act also allows transfer of permit

from one person to another and Section 83 17 allows the permit

holder to replace the vehicle covered by the permit by any other

vehicle of the same nature. Moreover, Section 192A18 of the 1988

16 82. Transfer of permit.—(1) Save as provided in sub-section (2), a permit shall not be

transferable from one person to another except with the permission of the transport authority

which granted the permit and shall not, without such permission, operate to confer on any

person to whom a vehicle covered by the permit is transferred any right to use that vehicle in

the manner authorised by the permit.

(2) Where the holder of a permit dies, the person succeeding to the possession of the vehicle

covered by the permit may, for a period of three months, use the permit as if it had been granted

to himself:

Provided that such person has, within thirty days of the death of the holder, informed the

transport authority which granted the permit of the death of the holder and of his own intention

to use the permit:

Provided further that no permit shall be so used after the date on which it would have

ceased to be effective without renewal in the hands of the deceased holder.

(3) The transport authority may, on application made to it within three months of the death of

the holder of a permit, transfer the permit to the person succeeding to the possession of the

vehicles covered by the permit:

Provided that the transport authority may entertain an application made after the expiry

of the said period of three months if it is satisfied that the applicant was prevented by good and

sufficient cause from making an application within the time specified.

17 83. Replacement of vehicles.—The holder of a permit may, with the permission of the

authority by which the permit was granted, replace any vehicle covered by the permit by any

other vehicle of the same nature.

18 192A. Using vehicle without permit.—(1) Whoever drives a motor vehicle or causes or

allows a motor vehicle to be used in contravention of the provisions of sub-section (1) of section

66 or in contravention of any condition of a permit relating to the route on which or the area in

which or the purpose for which the vehicle may be used, shall be punishable for the first offence

with imprisonment for a term which may extend to six months and a fine of ten thousand rupees

and for any subsequent offence with imprisonment which may extend to one year but shall not

be less than six months or with fine of ten thousand rupees or with both:

Provided that the court may for reasons to be recorded, impose a lesser punishment.

Act specifically imposes punishment of imprisonment for a term

specified therein for using a vehicle without a permit and Section

17719 of the 1988 Act is a general provision for punishment owing to

contravention of the provisions of the Act or of any rule, regulation,

or notification made thereunder. Section 20720 of the 1988 Act also

(2) Nothing in this section shall apply to the use of a motor vehicle in an emergency for the

conveyance of persons suffering from sickness or injury or for the transport of materials for

repair or for the transport of food or materials to relieve distress or of medical supplies for a like

purpose:

Provided that the person using the vehicle reports about the same to the Regional

Transport Authority within seven days from the date of such use.

(3) The court to which an appeal lies from any conviction in respect of an offence of the nature

specified in sub-section (1), may set aside or vary any order made by the court below,

notwithstanding that no appeal lies against the conviction in connection with which such order

was made.

19 177. General provision for punishment of offences.—Whoever contravenes any provision

of this Act or of any rule, regulation or notification made thereunder shall, if no penalty is

provided for the offence be punishable for the first offence with fine which may extend to five

hundred rupees, and for any second or subsequent offence with fine which may extend to one

thousand and five hundred rupees.

20 207. Power to detain vehicles used without certificate of registration permit, etc.—(1)

Any police officer or other person authorised in this behalf by the State Government may, if he

has reason to believe that a motor vehicle has been or is being used in contravention of the

provisions of section 3 or section 4 or section 39 or without the permit required by sub-section

(1) of section 66 or in contravention of any condition of such permit relating to the route on

which or the area in which or the purpose for which the vehicle may be used, seize and detain

the vehicle, in the prescribed manner and for this purpose take or cause to be taken any steps

he may consider proper for the temporary safe custody of the vehicle:

Provided that where any such officer or person has reason to believe that a motor vehicle

has been or is being used in contravention of section 3 or section 4 or without the permit

required by sub-section (1) of section 66 he may, instead of seizing the vehicle, seize the

certificate of registration of the vehicle and shall issue an acknowledgment in respect thereof.

(2) Where a motor vehicle has been seized and detained under sub-section (1), the owner or

person in charge of the motor vehicle may apply to the transport authority or any officer

authorised in this behalf by the State Government together with the relevant documents for the

provides for seizure and detention of any vehicle that is plying

without a permit. In other words, there is an inbuilt mechanism in

the 1988 Act for situations to deal with violation of conditions of

permit or using the vehicle without a valid permit. This being a

complete code, it would not be open to the State Legislature to

impinge upon the occupied field. Hence, Section 15 of the 1976 Act

is in direct conflict with the legislative scheme under the Central

legislation, dealing with permit of transport vehicles. The State

legislation would only be limited to tax on vehicles and cannot

transcend on matters relating to permits or its effectiveness during

the term of five years provided for under Section 8121 of the 1988

release of the vehicle and such authority or officer may, after verification of such documents,

by order release the vehicle subject to such conditions as the authority or officer may deem fit

to impose.

21 81. Duration and renewal of permits.—(1) A permit other than a temporary permit issued

under section 87 or a special permit issued under sub-section (8) of section 88 shall be effective

from the date of issuance or renewal thereof for a period of five years:

Provided that where the permit is countersigned under sub-section (1) of section 88, such

counter-signature shall remain effective without renewal for such period so as to synchronise

with the validity of the primary permit.

(2) A permit may be renewed on an application made not less than fifteen days before the date

of its expiry.

(3) Notwithstanding anything contained in sub-section (2), the Regional Transport Authority or

the State Transport Authority, as the case may be, entertain an application for the renewal of a

permit after the last date specified in that sub-section if it is satisfied that the applicant was

prevented by good and sufficient cause from making an application within the time specified.

Act. Whereas, Section 15 of the 1976 renders the transport permit

ineffective. Thus, it exposes the permit holder to multiple

punishment under the 1988 Act as well as the 1976 Act.

12. He further submits that repugnancy can arise even in the

absence of direct or irreconcilable conflict, if it touches upon the field

occupied by the Central legislation. Reliance is placed on Deep

(4) The Regional Transport Authority or the State Transport Authority, as the case may be, may

reject an application for the renewal of a permit on one or more of the following grounds,

namely:—

(a) the financial condition of the applicant as evidenced by insolvency, or decrees for

payment of debts remaining unsatisfied for a period of thirty days, prior to the date of

consideration of the application;

(b) the applicant had been punished twice or more for any of the following offences within

twelve months reckoned from fifteen days prior to the date of consideration of the

application committed as a result of the operation of a stage carriage service by the

applicant, namely:—

(i) plying any vehicle—

(1) without payment of tax due on such vehicle;

(2) without payment of tax during the grace period allowed for payment of such

tax and then stop the plying of such vehicle;

(3) on any unauthorised route;

(ii) making unauthorised trips:

Provided that in computing the number of punishments for the purpose of clause (b), any

punishment stayed by the order of an appellate authority shall not be taken into account:

Provided further that no application under this sub-section shall be rejected unless an

opportunity of being heard is given to the applicant.

(5) Where a permit has been renewed under this section after the expiry of the period thereof,

such renewal shall have effect from the date of such expiry irrespective of whether or not a

temporary permit has been granted under clause (d) of section 87, and where a temporary

permit has been granted, the fee paid in respect of such temporary permit shall be refunded.

Chand vs. The State of Uttar Pradesh & Ors. 22 which had

followed the decisions in Zaverbhai Amaidas vs. The State of

Bombay23 and Ch. Tika Ramji & Ors., etc. vs. The State of Uttar

Pradesh & Ors. 24 . Reliance is also placed on Thirumuruga

Kirupananda Variyar Thavathiru Sundara Swamigal Medical

Educational & Charitable Trust vs. State of Tamil Nadu &

Ors.25; and Kulwant Kaur & Ors. vs. Gurdial Singh Mann (Dead)

by LRs. & Ors.26.

13. It is urged that as there is repugnancy, the State of Kerala

ought to have obtained Presidential assent in respect of the 1976 Act

after coming into force of the 1988 Act as was obtained under the

proviso to Article 304(b) of the Constitution on 25.3.1976 in

reference to the provisions of the 1939 Act. In absence of such

Presidential assent, Section 15 of the 1976 Act is rendered ultra

22 (1959) Supp. 2 SCR 8 (para 28)

23 (1955) 1 SCR 799

24 (1956) SCR 393

25 (1996) 3 SCC 15 (para 26)

26 (2001) 4 SCC 262 (para 14)

vires, being repugnant with Section 81 of the 1988 Act. Reliance is

placed on Kaiser-I-Hind Pvt. Ltd. & Anr. vs. National Textile

Corpn. (Maharashtra North) Ltd. & Ors.27. For the same reason,

the State of Kerala ought to have obtained Presidential assent under

Article 304(b) of the Constitution in respect of amended provisions

vide the Amendment Act of 2005. Reliance is also placed on Hoechst

Pharmaceuticals Ltd. & Ors. vs. State of Bihar & Ors. 28 to

contend that the question of repugnancy under Article 254(1)

between a law made by the Parliament and a law made by the State

Legislature arises only in case both the legislations occupy the same

field with respect to one of the matters enumerated in the

Concurrent List, and there is direct conflict between the two laws.

But, Article 254(1) has no application to cases of repugnancy due to

overlapping found between List II on the one hand, and Lists I and

III on the other. If such overlapping exists, the State law will be ultra

vires because of the non obstante clause in Article 246(1) read with

Article 246(3). The State law in that case would eventually fail for

27 (2002) 8 SCC 182 (paras 72 to 76)

28 (1983) 4 SCC 45 (para 69)

lack of legislative competence and not because of repugnancy.

Reliance is also placed on State of Kerala & Ors. vs. Mar Appraem

Kuri Company Limited & Anr.29 which had dealt with the efficacy

of Article 246(1) of the Constitution.

14. It is also urged that the appellants cannot be non-suited from

arguing the validity of Section 15 of the 1976 Act, being in conflict

with Section 81 of the 1988 Act, merely because of the concession of

the counsel on the question of law before the High Court. To

buttress this submission, reliance is placed on the dictum in Union

of India & Ors. vs. Mohanlal Likumal Punjabi & Ors.30 and

Director of Elementary Education, Odisha & Ors. vs. Pramod

Kumar Sahoo31.

15. It is, thus, submitted that the appellants are entitled to assail

the constitutional validity of not only sub-Sections (7) and (8) of

Section 4, as inserted by the Amendment Act of 2005 in the 1976

29 (2012) 7 SCC 106 (para 39)

30 (2004) 3 SCC 628 (paras 8 and 9)

31 (2019) 10 SCC 674 (para 11)

Act, but also Section 15 of the 1976 Act. In the submission of the

appellants, these provisions are unconstitutional.

16. Mr. K. Radhakrishnan, learned senior counsel appearing for

the appellants in the connected matters, more or less, pursued the

same line of challenge to the amended provisions and Section 15 of

the 1976 Act, but in addition, he also assailed the validity of Section

8A, as inserted by Act 23 of 2005 in the 1985 Act. According to him,

Section 8A of the 1985 Act with its non-obstante clause in effect

overrides the Central legislation i.e., the 1988 Act. He submits that

the High Court, in paragraph 19 of the impugned judgment, has

upheld the constitutional validity of Section 8A of the 1985 Act; and,

hence, it is open to the appellants to challenge the validity of this

provision in the present appeals. In his submission, Entry 57 of List

II (State List) is made subject to Entry 35 of the Concurrent List (List

III). Hence, the impugned amendments in Section 4 of the 1976 Act

cannot encroach and override the Central legislation i.e., the 1988

Act, much less undermine the Stage and Goods Carriage Operations

as per the permit issued under that Act.

17. It is further urged that Entry 57 of List II (State List) is not

made subject to Entry 24 of the Concurrent List and for which

reason, the 1976 Act cannot be made subservient to the 1985 Act.

The 1985 Act is a labour welfare legislation, whereas the 1976 Act is

a legislation which is compensatory in nature. In any case, the 1988

Act is a complete code and a regulatory legislation. In his

submission, the welfare legislation has been intertwined by the State

of Kerala with the compensatory legislation vide impugned

amendments/insertions and together these provisions substantially

encroach and override the dispensations and provisions predicated

in the 1988 Act concerning issuance of permits and its effectiveness.

In his submission, the impugned State enactments are repugnant

with the Central law and there exist irreconcilable conflict and direct

collision between the State and Central legislations, impinging upon

the mandate of Article 254(1) of the Constitution which declares that

the Central legislations must prevail. He submits that the impugned

State enactments are, therefore, void and unconstitutional. The

same do not have the protection under Article 254(2) of the

Constitution and in absence of Presidential assent, it cannot prevail.

He has placed reliance on M. Karunanidhi 32 ; Association of

Natural Gas & Ors. vs. Union of India & Ors.33; and Dharappa

vs. Bijapur Coop. Milk Producers Societies Union Ltd.34.

18. It is his submission the State enactments suffer from the vice

of the lack of legislative competence and are colourable legislations.

The field of legislation in Entry 57 of the State List and Entry 24 of

the Concurrent List are distinct and different. However, two State

legislations are operating in different fields to achieve different goals.

For that reason, the impugned amendments/insertions in the

concerned provisions are bordering on transgression of the limits of

the powers to achieve indirectly the collection of welfare fund

contribution. The State Legislature is not competent to frame such

law for ensuring collection of welfare fund dues through the medium

of a taxation statute. In the process, the taxation statute is made to

yield to the welfare fund statute. To buttress this submission,

32 Supra at Footnote No.14 (para 8)

33 (2004) 4 SCC 489 (paras 13 and 15)

34 (2007) 9 SCC 109 (para 12)

reliance has been placed on the dictum in Ashok Kumar alias Golu

vs. Union of India & Ors.35 and State of Tamil Nadu & Ors. vs.

K. Shyam Sunder & Ors.36.

19. It is then submitted that the impugned

amendments/insertions are manifestly arbitrary and inevitably

impinge upon the fundamental rights inasmuch as, the substantive

unreasonableness is apparent on the face of the impugned

insertions by way of sub-Section (8) of Section 4 which declares that

no tax shall be collected unless the receipt of remittance of

contribution towards welfare fund mentioned in sub-Section (7) of

Section 4 is produced. This is manifestly arbitrary and

unreasonable. In that, the Taxation Officer is duty bound to accept

tax when offered by the tax payer and he cannot refuse to do so

much less to impact the Stage and Goods Carriage Operations with

valid permits issued under the Central legislations i.e., the 1988 Act.

The permit so issued cannot be rendered ineffective by a State

35 (1991) 3 SCC 498 (para 9)

36 (2011) 8 SCC 737 (para 36)

legislation. In that sense, the impugned amendments/insertions are

hit by Article 254(1) and 254(2) of the Constitution. The

presumption of constitutionality cannot come to the aid of the

impugned amendments/insertions which are vitiated by manifest

legislative arbitrariness and have deleterious impact on the permit

of Stage and Goods Carriage Operations. The impugned insertions,

therefore, fall foul of Article 19(1)(g) of the Constitution as well.

Reliance is placed on Ajay Hasia & Ors. vs. Khalid Mujib

Sehravardi & Ors.37 and K. Shyam Sunder38. It is, therefore,

submitted that the appeals be allowed and the impugned provisions

in the State enactments be declared as unconstitutional.

20. Mr. Abraham Mathews, learned counsel appearing for the State

of Kerala, has adopted the reasons recorded by the Division Bench

of the High Court in the impugned judgment. Additionally, it is

submitted that the appellants conceded their liability to pay the tax

levied under the 1976 Act as well as their dues/contribution under

37 (1981) 1 SCC 722 (para 16)

38 Supra at Footnote No.36 (paras 50 to 53)

the 1985 Act. In that sense, the only challenge in these appeals is

that the amendment makes payment of the welfare dues a

precondition for the collection of the tax, thereby dovetailed with a

tax, merely for the purpose of compliance. Such a provision cannot

be construed as unconstitutional. It is always open to the

Legislature to combine levies for other purposes such as education

cess, etc. Moreover, in paragraph 19 of the impugned judgment, the

Division Bench of the High Court has clearly provided by directing

the statutory authorities that if a tax payer produces proof of having

preferred an appeal in the prescribed mode in respect of legitimate

dispute over the quantum of levy, that be regarded as sufficient

compliance. This is a safeguard and must be good enough to

assuage the apprehension of the appellants, who intend to dispute

the quantum of levy under the 1985 Act. In other words, if the

permit holder has resorted to remedy of appeal/review in respect of

demand under the 1985 Act, that would be regarded as sufficient

compliance so as to accept the vehicle tax by the Taxation Officer

under the 1976 Act. Therefore, no prejudice whatsoever would be

caused to such permit holder. In any case, the permit holder cannot

be heard to argue that he would not pay the dues under the 1985

Act and yet would want to continue with the business as usual,

exploiting the workers sheerly because of the validity of the permit

to operate transport vehicle used in the same business as usual. As

a matter of fact, the levy under the 1985 Act is covered by Entry 24

of the Concurrent List. Whereas, the vehicle tax is levied as per

Entry 35 thereof. The two fields are different and there is no

encroachment into the legislative domain of the Parliament.

21. It is further urged that even if it is a case of encroachment into

the legislative domain of the Parliament, such encroachment, being

incidental one, is protected by the doctrine of pith and substance as

expounded in Hoechst Pharmaceuticals Ltd.39.

22. It is also urged that the levy of contribution to the workers’

welfare fund is a socially beneficial legislation intended to protect the

workers of the commercial operations undertaken by the appellants

and other similarly placed vehicle operators pursuant to permit

39 Supra at Footnote No.28

issued under the Central legislation. The workers engaged by them

may not be eligible to avail of the pension and provident fund

scheme. In most of the cases, they are typically unorganised and

part of the informal workforce of the country and often left to fend

for themselves. The 1985 Act is to reach out to such workers and

provide them with support on the basis of the collection made from

the Stage and Goods Carriage Operators. In the past, there has been

any number of instances where the operators had deliberately

avoided to pay and contribute to the workers’ welfare fund which

was frowned upon even by the High Court warranting amendments

to the State legislations which are impugned in the present

proceedings.

23. It is, thus, urged that the challenge set forth by the appellants

is devoid of merit. In that, the provisions of the State enactments,

which are impugned in the present proceedings, do not undo the

permit issued under the Central legislation as such, but merely

restates the mandate of the Central legislation itself that the vehicle

cannot be used without permit and payment of vehicle tax. Merely

because permit is issued under the Central legislation which

provides for a term of five years from the date of issuance, it does

not follow that the permit holder or the vehicle owner can operate

the vehicle under such a permit without payment of tax payable by

virtue of the State legislation and more so linked to the activities

relatable to the vehicle. It is open to the State to stop any vehicle or

seize and detain the vehicle despite a valid permit if it is used or kept

for use within the State without payment of tax payable under the

1976 Act. That is a consequence under the State legislation. In one

sense, the amended provisions using the expression “ineffective”

would mean that despite a valid permit, action can be taken under

the State legislation concerning the vehicle which is used or kept for

use within the State without payment of tax.

24. It is a different matter that precondition of production of proof

of payment of dues under the 1985 Act has been provided for before

accepting the vehicle tax by the Taxation Officer. If so understood,

Section 15 of the 1976 Act cannot be regarded as in conflict or

repugnant with Section 81 of the 1988 Act. Even under the 1988

Act, the permit holder is obliged to pay tax regularly, failing which,

it can entail cancellation or rejection of permit/renewal, including

penal consequences for violation.

25. Mr. P.N. Ravindran, learned senior counsel, appearing for the

Kerala Motor Transport Workers Welfare Fund Board40, has also

defended the view taken by the Division Bench of the High Court.

He submits that in the State of Kerala, the levy of tax on motor

vehicles is governed by the 1976 Act, a law enacted by the State

Legislature under Entry 57 of List II of the Seventh Schedule to the

Constitution. This Act had received Presidential assent on

15.3.1976. Whereas, the 1985 Act was enacted by the State

Legislature under Entry 24 of List III of the Seventh Schedule to the

Constitution. Under Section 3

41 of this Act, the State Government

40 for short, “the Welfare Fund Board”

41 3.Motor Transport Workers Welfare Fund.-

(1) The Government may, by notification in the Gazette, frame a scheme to be called the Kerala

Motor Transport Workers’ Welfare Fund Scheme for the establishment of a Fund under this Act

for employees and there shall be established, as soon as may be after the framing of the scheme,

a Fund in accordance with the provisions of this Act and the scheme.

(2) The Fund shall vest in, and be administered by, the Board.

(3) Subject to the provisions of this Act, the scheme may provide for all or any of the matters

specified in the Schedule.

has formulated a scheme known as ‘the Kerala Motor Transport

Workers Welfare Fund Board Scheme, 1985’42. As per Section 943 of

the 1985 Act and paragraph 29 of the 1985 Scheme, every employer,

employee and self-employed person are obliged to remit the monthly

contribution on or before the 7th day of the succeeding month.

Section 844 of the 1985 Act and paragraph 28 of the 1985 Scheme

42 for short, “the 1985 Scheme”

43 9. Remittance of monthly contribution.-

(1) Every employer, employer and self-employed person shall, pay the contribution due from

him every month as provided for in the scheme.

(2) The monthly contribution shall become payable on or before the 7th day of the succeeding

month.

44 8 Determination of amount due.-

(1) The Chief Executive Officer or any other officer appointed under sub-section (1) of section 7

authorised by him in this behalf may, by order, determine the amount due under the provisions

of this Act or of the Scheme from the employer, employee and self-employed person and if the

amount due is not paid on or before the due date he shall issue a demand notice to the defaulter

showing the amount of arrears.

(2) Any person aggrieved by the determination of arrears under sub-section (1) may file a review

petition before the authority who had determined the arrears, showing detailed facts and

reasons for reviewing the original determination within seven days of receipt of demand notice.

(3) A review petition filed under sub-section (2) shall be disposed of by the authority within a

period of thirty days from the date of its receipt.

(4) Any person aggrieved by an order under sub-section (3) may prefer an appeal before the

District Labour Officer of the concerned district and it staff be disposed of by him within a period

of sixty days from the date of its receipt.

(5) If the amount of arrears in dispute exceeds rupees one lakh, any person aggrieved by an

order under sub-section (4) may prefer a second appeal before the Board and it shall be disposed

of within a period of sixty days from the date of its receipt.

(6) Every order passed under sub-section (4) or sub-section (5) as the case may be, shall be

final.

provide for determination of the amount due under the Act and the

Scheme from the employer, employee and self-employed person. It

provides for remedy of review petition before the authority, who

determined the arrears; an appeal before the District Labour Officer;

and, in cases where arrears in dispute exceed Rs.1,00,000/-, a

second appeal to the Kerala Motor Transport Workers Welfare Fund

Board. The appeal can be entertained only if 50% of the amount, as

mentioned in the order under challenge, is paid. It was noticed that

mandate of the 1985 Act and the 1985 Scheme was not being

complied with in most of the cases. This aspect was taken note of

by the High Court in O.P. No.7440 of 2003 filed by the Kerala Private

Bus Operators Federation and pursuant to the directions issued by

the High Court, not only the Scheme was amended, but Section 8A

(7) No appeal under this section shall be entertained unless the amount in accordance with the

order against which the appeal has been preferred is paid.

(8) If the appellate authority in an appeal decides that the amount paid is in excess of what is

due from the appellant, it may, by order, direct for the refund of the excess amount.

(9) An officer or authority exercising the power of appeal under sub-section (5) of section 8 of

the Kerala Motor Transport Workers’ Welfare Fund Act. 1985, immediately before the

commencement of the Kerala Motor Transport Workers’ Welfare Fund (Amendment) Ordinance,

2005 shall continue to exercise such powers, in respect of the case pending before such officer

or authority.

came to be inserted in the 1985 Act vide Act 23 of 2005.

Simultaneously, by Act 24 of 2005, the 1976 Act came to be

amended by inserting sub-Sections (7) and (8) in Section 4 of that

Act. The purport of the inserted sub-Sections (7) and (8) of Section

4 was more or less in line with the regime specified in Section 15 of

the 1976 Act. Under the 1976 Act, by virtue of Section 10, any officer

of the Motor Vehicles Department not below the rank of Assistant

Motor Vehicles Inspector or any police officer in uniform not below

the rank of Sub-Inspector, has been empowered to stop any vehicle

for the purpose of satisfying himself that the amount of the tax due

in respect of such vehicle has been paid.

26. Section 11 of the 1976 Act empowers the stated officers to seize

and detain taxable motor vehicles used or kept for use in the State

of Kerala without payment of tax pending production of proof of

payment of the tax. Notably, these provisions have not been

challenged. In one sense, without the amended provisions, the

permit issued under the 1988 Act would become ineffective in cases

where action is taken under Sections 10 and 11 of the 1976 Act.

Thus understood, Section 15 as well as the amended Section 4(7)

and (8) of the 1976 Act and Section 8A of the 1985 Act would have

the same effect in case of action taken by the stated officers under

Sections 10 and 11 of 1976 Act. The amended provisions merely

declare that position. It is nobody’s case merely because on the

basis of permit, the permit holder would be entitled to use vehicle or

keep the vehicle for use within the State of Kerala without payment

of tax. The levy of tax shall be on the basis of rate specified under

Section 3

45 of the 1976 Act. Despite the repeal of 1939 Act, these

45 3. Levy of Tax.-

(1) Subject to the provisions of this Act, on and from the date of commencement of this Act, a

tax shall be levied on every motor vehicle used or kept for use in the State, at the rate specified

for such vehicle in the Schedule:

Provided that no such tax shall be levied on a motor vehicle kept by a dealer in, or a

manufacturer of, such vehicle, for the purpose of trade and used under the authorization of a

trade certificate granted by the registering authority;

provided further that in respect of a new motor vehicle of any of the classes specified in

item Nos.1(b), 2 and 11 of the Schedule to this Act, there shall be levied from the date of

purchase of the vehicle 'one time tax' at the rates specified in the Annexure at the time of the

first registration of the vehicle, and thereafter tax shall be levied in the schedule as per the

fourth proviso to sub-section (1) of Section 4.

Provided further that in respect of new motor vehicle of any of the descriptions specified

in item No.1(a) of the Schedule to this Act, there shall be levied from the date of purchase of the

vehicle a tax in advance for a period of five years at the rate specified in the schedule, at the

time of first registration of the vehicle, and thereafter tax shall be levied at the rate specified in

the Schedule in accordance with the fourth proviso to sub section (1) of Section 4.

(2) The Government may from time to time by notification in the Gazette, increase the rate of

tax specified in the Schedule:

Provided that such increase shall not in the aggregate exceed fifty per cent of such rate.

provisions of the 1976 Act continue to operate, thereby empowering

the stated officers to act against the vehicle used or kept for use

within the State of Kerala without payment of vehicle tax.

(3) The registered owner of, or any person having possession or control of a motor vehicle shall,

for the purpose of this Act, be deemed to use or kept such vehicle for use in the State, except

during any period for which no tax is payable on such motor vehicle under sub section (1) of

Section 5.

(4) Notwithstanding anything contained in sub-section (1), the Government may, from time to

time, by notification in the Gazette, direct that a temporary licence for a period not exceeding

seven days or thirty days at a time may be issued in respect of any class of motor vehicles

specified in the Schedule on payment of the tax specified in sub-section (5), and subject to such

conditions as may be specified in such notification.

(5) The tax payable for a temporary licence in respect of a motor vehicle shall be-

(a) where the temporary licence is for period not exceeding seven days, at the rate of onetenth of the quarterly tax on that motor vehicle; and

(b) where the temporary licence is for a period exceeding seven days but not exceeding

thirty days, at the rate of one third of the quarterly tax on that motor vehicle:

Provided also that in the case of vehicles covered with permit under sub-section (9) of

Section 88 of the Motor Vehicles Act, 1988 (Central Act 59 of 1988) and registered in any

State other than the State of Kerala and entering the State of Kerala and staying therein,

then, the tax payable for such vehicle shall be-

(a) if such stay. does not exceed seven days one-tenth of the quarterly tax; and

(b) if such stay exceeds seven days but does not exceed thirty days one third of the

quarterly tax

(6) In the case of motor vehicles in respect of which any reciprocal arrangement relating to

taxation has been entered into between the Government of Kerala and any other State

Government, the levy of tax shall, notwithstanding anything contained in this Act be in

accordance with the terms and conditions of such reciprocal arrangement.:

Provided that the terms and conditions of every such reciprocal arrangement shall be

published in the Gazette and a copy thereof shall be placed before the Legislative Assembly of

the State.

27. Section 15 merely makes reference to the 1939 Act without

incorporation of any provision thereof. Resultantly, the repeal of

that Act will have no impact on the provisions of the 1976 Act,

including in light of Section 8(1) of the General Clauses Act, 1897.

In support of this submission, reliance is placed on The Collector

of Customs, Madras vs. Nathella Sampathu Chetty & Anr.46 and

New Central Jute Mills Co. Ltd. vs. Assistant Collector of

Central Excise, Allahabad & Ors.47.

28. Coming to the challenge to the amended provisions vide State

legislation in 2005, it is urged that the Parliament has not enacted

any law regarding levy of tax on motor vehicles. The 1988 Act does

not deal with levy of tax on motor vehicles and the consequence of

non-payment of such tax. Whereas, the 1976 Act has been enacted

by the State Legislature under Entry 57 of List II of the Seventh

Schedule to the Constitution, which is exclusively within the domain

of the State Legislature. The regime regarding payment of tax in

46 AIR 1962 SC 316

47 (1970) 2 SCC 820

respect of motor vehicles and the consequence of non-payment, are,

therefore, exclusive to the 1976 Act. Thus understood, there is no

question of repugnancy between the provisions of the 1988 Act and

the State legislation in the field occupied by the 1976 Act. Suffice it

to observe contends the learned senior counsel that Section 15 of

the 1976 Act does not reduce the period of validity of the permit

issued under the 1988 Act, but it only stipulates that the vehicle tax

due in respect of transport vehicle must be paid within the

prescribed period and thereby declaring that in case of non-payment

of tax, the validity period of permit cannot come in the way of

initiating action against the vehicle used or kept for use within the

State of Kerala without payment of vehicle tax. If so understood,

there is no conflict between the period prescribed in terms of Section

81(1) of the 1988 Act and the provisions in the State legislation —

be it the 1976 Act or the 1985 Act.

29. As submitted earlier, the appellants have not challenged the

validity of Sections 10 and 11 of the 1976 Act in particular which

empower the stated officers to stop or seize and detain motor vehicles

used or kept for use in the State of Kerala without payment of vehicle

tax. The amended provisions of the 1976 Act and the 1985 Act

merely prescribe the modalities for payment and collection of vehicle

tax or payment of contribution to the Kerala Motor Transport

Workers’ Welfare Fund by requiring the employer/vehicle owner to

produce receipt regarding payment of contribution to the welfare

fund before the Taxation Officer while offering to pay vehicle tax

under the 1976 Act.

30. It is further urged that no argument can be countenanced that

the State Legislature lacks legislative competence to enact a law on

the subject of vehicle tax falling under Entry 57 of List II of the

Seventh Schedule to the Constitution. The 1988 Act does not deal

with either the modalities for the payment or collection of vehicle tax

as such. For which reason, there is no inconsistency between the

Central Act and the State Act. According to the learned senior

counsel, these appeals are devoid of merits and, therefore, the

decision of the Division Bench of the High Court under appeal needs

to be affirmed.

31. We have heard learned counsel appearing for both parties at

length.

32. After cogitating over the oral arguments and perusing the

written submissions, it needs to be noted at the outset that there is

no challenge on the ground of legislative competence in respect of

the 1976 Act and amendments thereto as well as the 1985 Act as

amended. The argument is essentially about repugnancy owing to

the application of the State laws to the vehicle permit issued under

the law made by Parliament. The tests of repugnancy have been

delineated by the Constitution Bench in Deep Chand48. Three

principles have been noted in this decision as follows:

“(1) Whether there is direct conflict between the two

provisions;

(2) Whether Parliament intended to lay down an

exhaustive code in respect of the subject-matter

replacing the Act of the State Legislature; and

(3) Whether the law made by Parliament and the law

made by State Legislature occupy the same field.”

33. We may usefully also refer to the decision in Thirumuruga

Kirupananda Variyar Thavathiru Sundara Swamigal Medical

48 Supra at Footnote No.22

Educational & Charitable Trust49 wherein the Court observed in

paragraph 26 as follows:

“26. It cannot, therefore, be said that the test of two

legislations containing contradictory provisions is the only

criterion of repugnance. Repugnancy may arise between

two enactments even though obedience to each of them is

possible without disobeying the other if a competent

legislature with a superior efficacy expressly or impliedly

evinces by its legislation an intention to cover the whole

field. The contention of Shri Sanghi that there is no

repugnancy between the proviso to Section 5(5) of the

Medical University Act and Section 10-A of the Indian

Medical Council Act because both can be complied with,

cannot, therefore, be accepted. What has to be seen is

whether in enacting Section 10-A of the Indian Medical

Council Act, Parliament has evinced an intention to cover

the whole field relating to establishment of new medical

colleges in the country.”

34. Keeping in mind the exposition of this Court in the

aforementioned decisions, we would immediately turn to the Act

enacted by the Parliament in 1988. This Act had repealed the

erstwhile Motor Vehicles Act, 1939. The Parliament has obviously

enacted the 1988 Act in reference to Entry 35 in List III – Concurrent

List which concerns the mechanically propelled vehicles including

the principles on which taxes on such vehicles are to be levied.

Notably, the 1988 Act provides for procedure of Regional Transport

49 Supra at Footnote No.25

Authority in considering application for stage carriage permit as

predicated in Section 7150 of the 1988 Act. The Authority while

50 71. Procedure of Regional Transport Authority in considering application for stage

carriage permit.— (1) A Regional Transport Authority shall, while considering an application

for a stage carriage permit, have regard to the objects of this Act.

(2) A Regional Transport Authority shall refuse to grant a stage carriage permit if it appears from

any time-table furnished that the provisions of this Act relating to the speed at which vehicles

may be driven are likely to be contravened:

Provided that before such refusal an opportunity shall be given to the applicant to amend

the time-table so as to conform to the said provisions.

(3)(a) The State Government shall, if so directed by the Central Government having regard to

the number of vehicles, road conditions and other relevant matters, by notification in the Official

Gazette, direct a State Transport Authority and a Regional Transport Authority to limit the

number of stage carriages generally or of any specified type, as may be fixed and specified in

the notification, operating on city routes in towns with a population of not less than five lakhs.

(b) Where the number of stage carriages are fixed under clause (a), the Government of the State

shall reserve in the State certain percentage of stage carriage permits for the scheduled castes

and the scheduled tribes in the same ratio as in the case of appointments made by direct

recruitment to public services in the State.

Authority shall reserve such number of permits for the scheduled castes and the scheduled

tribes as may be fixed by the State Government under sub-clause (b).

(d) After reserving such number of permits as is referred to in clause (c), the Regional Transport

Authority shall in considering an application have regard to the following matters, namely:—

(i) financial stability of the applicant;

(ii) satisfactory performance as a stage carriage operator including payment of tax if the

applicant is or has been an operator of stage carriage service; and

(iii) such other matters as may be prescribed by the State Government:

Provided that, other conditions being equal, preference shall be given to applications for

permits from—

(i) State transport undertakings;

(ii) co-operative societies registered or deemed to have been registered under any

enactment for the time being in force;

(iii) ex-servicemen; or

(iv) any other class or category of persons, as the State Government may, for reasons to

be recorded in writing consider necessary.

considering an application for grant of a stage carriage permit is

obliged to have regard to the objects of the 1988 Act including about

the satisfactory performance of the applicant as a stage carriage

operator and payment of tax [Section 71(3)(d)(ii)]. The other relevant

provision for considering the subject-matter of this appeal is Section

81 dealing with duration and renewal of permits. It postulates that

the permit issued by the Authority under the Act shall be effective

from the date of issuance or renewal thereof for a period of five years.

The proviso to sub-section (1) envisages that where the permit is

countersigned under sub-section (1) of Section 88, such

countersignature shall remain effective without renewal for such

period so as to synchronise with the validity of the primary permit.

We are not concerned with the effect of the proviso in the present

case. The relevant sub-section dealing with the power of the

Authority to reject an application for the renewal of a permit is subsection (4) of Section 81. It provides for the grounds on which the

Explanation.—For the purposes of this section “company” means any body corporate, and

includes a firm or other association of individuals; and “director”, in relation to a firm, means a

partner in the firm.

renewal of a permit can be rejected. The same includes plying any

vehicle without payment of tax due on such vehicle; and on any

unauthorised route. Besides these provisions, there is nothing in

the 1988 Act to deal with the manner of levy of vehicle tax or the

collection thereof. In other words, the law made by the Parliament

does not occupy the field of manner of levy of vehicle tax and

collection thereof. If so, it is not possible to hold that there is direct

conflict between the two provisions, namely, in the law made by the

Parliament and by the State Legislature. Furthermore, on analysing

the legislative intent and the efficacy of the impugned provisions

enacted by the State Legislature concerning the manner of levy of

vehicle tax and collection thereof, it will be amply clear that

obedience to each of the laws (made by the Parliament and State

Legislature) is possible without disobeying the other. We shall

elaborate on this aspect while dealing with efficacy of the law made

by the State Legislature a little later. Suffice it to observe that the

argument regarding repugnancy is devoid of merit.

35. As regards the 1976 Act enacted by the State Legislature, the

same is ascribable to Entries 56 and 57 of List II – State List. Entry

56 deals with taxes on goods and passengers carried by road or on

inland waterways. Entry 57 deals with taxes on vehicles, whether

mechanically propelled or not, suitable for use on roads, including

tramcars subject to the provisions of Entry 35 of List III. In one

sense, the law made by the State Legislature is also ascribable to

Entry 35 of List III under which the Parliament has already enacted

1988 Act. However, as aforementioned, the law made by the

Parliament, being 1988 Act, does not touch upon or deal with the

field of manner of levy of vehicle tax and collection thereof. Whereas,

the 1976 Act enacted by the State Legislature is to consolidate and

amend the laws relating to the levy of tax on motor vehicles and on

passengers and goods carried by such vehicles in the State of Kerala.

The levy of tax is spelt out in Section 3 of this Act. Section 4 deals

with payment of tax and issue of licence. The writ petitioners have

challenged the amendment made to this provision vide Act 24 of

2005 inserting sub-sections (7) and (8) therein. By this amendment,

it is provided that every registered owner or person having

possession or control of a motor vehicle in respect of a motor

transport undertaking liable to pay contribution under the 1985 Act

shall, before effecting payment of vehicle tax under the 1976 Act,

produce before the Taxation Officer the receipt of remittance of the

contribution towards welfare fund due upto the preceding month

and failure to do so, would entail in refusal to collect the vehicle tax

under the 1976 Act. In the context of this provision, it has been

urged that such a provision is in the nature of bootstrapping of two

different liabilities. Section 851 mandates production of certificate of

insurance by every registered owner or person having possession or

control of a motor vehicle. Section 952 fastens liability to pay vehicle

51 8.Production of certificate of insurance.- Every registered owner or person having

possession or control of a motor vehicle shall, at the time of making payment of the tax, produce

before the Taxation Officer a certificate of insurance in respect of the vehicle, which is valid at

the time of making such payment, complying with the requirements of Chapter VIII of the Motor

Vehicles Act, 1939 (Central Act 4 of 1939).

52 9.Liability to payment of tax by persons succeeding to the ownership, possession or

control of motor vehicles.-

(1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the

payment thereof and such person before payment of tax has transferred the ownership of such

vehicle or has ceased to be in possession control of such vehicle, the person to whom the

ownership of the vehicle has been transferred or the person who has possession or control of

such vehicle shall be liable to pay the said tax.

(2) Nothing contained in Sub-section (1) shall be deemed to affect the liability to pay the said

tax of the person who has transferred the ownership or has ceased to be in possession or control

of such vehicle.

tax by person succeeding to the ownership, possession or control of

motor vehicles. Sections 10 and 11 are of some relevance. The same

reads thus:

“10. Power of officers of Police or Motor Vehicles

Department to stop motor vehicles.-

(1) Any officer of the Motor Vehicles Department not below

the rank of Assistant Motor Vehicles Inspector or any

police officer in uniform who is not below the rank of a Sub

Inspector may require the driver of any motor vehicle in

any place to stop such vehicle and cause it to remain

stationary so long as may reasonably be necessary for the

purpose of satisfying himself that the amount of the tax

due in accordance with the provisions of this Act in respect

of such vehicle has been paid.

(2) Any person failing to stop a motor vehicle when

required to do so under sub-section (1) by any officer

referred to in that sub-section or resisting any such officer

when required under that sub-section to stop a motor

vehicle shall, on conviction, be punishable with the same

penalty as provided in section 16.

11. Seizure and detention of motor vehicles pending

production of proof of remittance of tax. – Any Officer

not below the rank of Assistant Motor Vehicles Inspector

authorized in this behalf by the Government or any police

officer not below the rank of Sub-Inspector may, if he has

reason to believe that a taxable motor vehicle is used or

kept for use in the State without paying the tax, seize and

detain that vehicle and make arrangements for the safe

custody of that vehicle pending production of proof of

payment of the tax.”

Concededly, the validity of these two provisions have not been

assailed by the writ petitioners and, failure to do so, may have some

bearing on the view that we propose to take. Additionally, we may

also advert to Section 15 of the Act which is the subject-matter of

challenge in these proceedings. The same reads thus:

“15. Transport Vehicle permit to be ineffective if tax

not paid.- Notwithstanding anything contained in the

Motor Vehicles Act, 1939 (Central Act 4 of 1939) if the tax

due in respect of a transport vehicle is not paid within the

prescribed period, the validity of the permit for that vehicle

shall become ineffective from the date of expiry of the said

period until such time as the tax is actually paid.”

36. From the scheme of the 1976 Act, it is amply clear that it is

specific to levy of tax on motor vehicle and passengers and goods

carried by such vehicle in the State of Kerala. It is not a law

regulating the issuance of a permit by the Authority under the 1988

Act as such. Indisputably, the permit issued by the Authority is

hedged with conditions including the condition of regular payment

of vehicle tax. Section 15 provides for the consequences for nonpayment of tax consistent with Sections 10 and 11 of the 1976 Act.

Thus understood, there is no occasion for conflict between the two

provisions much less repugnancy.

37. As regards the argument regarding bootstrapping of liabilities

of permit-holder under two different State legislations, it is to say

the least tenuous. It is open to the Legislature to combine levies for

other purposes, such as education cess, etc., for collection of tax due

and payable by the same tax-payer. It is one thing to say that the

person is being compelled to discharge liability under two different

State enactments, although he is not liable under one of the two.

That is not the argument of these writ petitioners. The petitioners

are not disputing their liability under both the State Enactments.

The argument, however, is that the writ petitioners may intend to

invoke remedy of appeal and revision in respect of liability fastened

under the 1985 Act. This argument has been rightly negatived by

the High Court in paragraph 18 of the impugned judgment by

observing that sufficient safeguard has been provided under the

relevant enactment to file appeal/revision by remitting 50 per cent

of the amount demanded. The High Court issued directions in that

regard in paragraph 19 of the impugned judgment. A circular has

been issued on 16.6.2007, clarifying that the aggrieved person, who

prefers appeal on payment of 50 per cent of the contribution under

the Welfare Fund Act, is entitled to get a certificate to that effect and

on production of that certificate before the Taxing Authorities, the

vehicle tax could be received by the Authority without payment of

the entire Welfare Fund of contributions. The High Court has

already issued directions to extend similar benefit even in cases

where review petition is filed within the prescribed time. The fact

remains that no prejudice whatsoever is caused to the permit-holder

who intends to pursue remedy under the 1985 Act against the

demand received by him relating to the contribution of the Welfare

Fund.

38. Reverting to the 1985 Act enacted by the State Legislature,

indisputably, it is a welfare legislation constituting a fund to promote

the welfare of motor transport workers in the State of Kerala. This

Act is ascribable to Entries 23 and 24 of List III – Concurrent List.

Entry 23 deals with social security and social insurance;

employment and unemployment and Entry 24 deals with welfare of

labour including conditions of work, provident funds, employers’

liability, workmen’s compensation, invalidity and old age pensions

and maternity benefits. Ostensibly, it may appear that the liability

arising from the obligations under the 1985 Act have nothing to do

with the subject of vehicle tax. However, the 1985 Act has been

enacted with the objects and reasons noted. As a vast number of

employees were being engaged in Motor Transport Industry in the

State in the private sector, the Government thought it necessary to

provide for the constitution of a Fund to promote the welfare of such

of the motor transport workers in the private sector who are not

covered by the Employees’ Provident Funds and Miscellaneous

Provisions Act, 1952 and the Payment of Gratuity Act, 1972. In

other words, this Act came into being to ameliorate the difficulties

encountered by the motor transport workers in the State of Kerala.

In due course, it came to the notice of the Government that the

system of determination and assessment of contribution from

employers and adjudication of disputes, etc., as provided for in the

1985 Act had certain loopholes resulting in loss of welfare fund

contribution. In that, the bus operators set forth a defence by

creating bogus partnerships and showing relatives as employees to

evade payment of contribution. Another device was to keep on

changing the employees frequently. Thus, to check this mischief, an

amendment was effected to the 1985 Act vide Act 23 of 2005

including to reduce the arbitrariness in fixing the contribution. The

activities of motor transport workers are directly linked to the use

and operation of the motor transport vehicles having permit issued

under the 1988 Act in that regard. Under the said Act, the permitholder is obliged to ensure that the vehicle tax is paid regularly. The

law clearly provides for action to be taken against the motor

transport vehicle for failure to pay vehicle tax including to reject

renewal of the permit. The stipulation in the 1985 Act is in the

nature of ensuring that the vehicle owner/permit-holder discharges

both the liabilities and does not commit default in contributing to

the welfare fund as also pay vehicle tax on time. Non-payment of

vehicle tax may entail in stopping of motor vehicle by the Officers of

Police or Motor Vehicles Department in exercise of power under

Section 10 of the 1976 Act including to seize and detain the same

pending production of proof remittance of tax as predicated in

Section 11 of the Act. Additionally, the vehicle owner may have to

suffer penalty under Section 16 53 and face prosecution under

53 16. Penalties.- Whoever contravenes any of the provisions of this Act or any rule made

thereunder shall, on conviction, if no other penalty is elsewhere provided in this Act or the rules

for such contravention, be punishable with fine which may extend to one hundred rupees and,

Section 1754, besides the permit being rendered ineffective if tax is

not paid by virtue of Section 15.

39. Considering the scheme of the State legislations, it is

incomprehensible to countenance the argument that the two

provisions (of 1988 Act on the one hand and of 1976 Act and 1985

in the event of such person having been previously convicted of an offence under this Act or any

rule made thereunder with fine which may extend to two hundred rupees.

54 17. Offences by companies.-

(1) Where an offence under this Act has been committed by a company, every person who, at

the time the offence was committed, was in charge of, and was responsible to, the company for

the conduct of the business of the company, as well as the company, shall be liable to be

proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable

to any punishment if he proves that the offence was committed without his knowledge or that

he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1) where an offence under this Act has

been committed by a company and it is proved that the offence has been committed with the

consent or connivance of or is attributable to any neglect on the part of any director, manager,

secretary or other officer of the company, such director, manager, secretary or other officer shall

also be deemed to be guilty of that offence and shall be liable to be proceeded against and

punished accordingly.

Explanation:- For the purpose of this section-

(a)"company" means a body corporate, and includes a firm or other association of individuals;

and

(b) "director", in relation to -

(i) a firm, means a partner in the firm.,

(ii) a society or other association of individuals, means the person who is entrusted under

the rules of the society or other association with the management of the affairs of the

society or other association, as the case may be.

Act on the other) are inconsistent in any manner whatsoever.

Whereas, the State enactments are complementary and can be given

effect to without any disobedience to the Central legislations. As

aforementioned, the 1988 Act does not cover the field of the manner

of levy of vehicle tax and collection thereof. The same is covered by

the State legislations.

40. Concededly, the appellants have not disputed their liability to

pay the vehicle tax levied under the 1976 Act as well as to pay

contribution towards the workers’ welfare fund under the 1985 Act.

So understood, the real grievance in these appeals by the motor

transport vehicle owners/permit-holders is about compelling them

to pay the welfare contribution dues as a precondition for collection

of vehicle tax. We have no hesitation in taking the view that such

dispensation cannot be construed as unconstitutional. Further,

such a plea cannot be countenanced at the instance of someone who

otherwise concedes liability to pay both the dues towards welfare

fund contribution and vehicle tax. It is beyond comprehension that

the vehicle owner/permit-holder can be heard to argue that he would

not pay the dues under the 1985 Act and, yet, would continue with

the business of motor transport as usual in the State of Kerala by

exploiting the workers on the specious plea that the validity of the

permit to operate transport vehicle cannot be interdicted under a

State legislation. The provision in the form of Section 15 of the 1976

Act is in the nature of restating the consequences flowing from

Sections 10 and 11 of the same Act to stop motor vehicle and to seize

and detain the same if being used or operated without payment of

vehicle tax. When action is taken by the competent authority under

Sections 10 and 11 of the Act, inevitably, the transport vehicle in

question for which permit has been taken is rendered unusable due

to non-payment of vehicle tax. The liability of the vehicle

owner/permit-holder to pay welfare fund contribution as well as to

pay vehicle tax arises under the legislation enacted by the State

Legislature. As such, there is nothing wrong in State Legislature

making it compulsory to pay outstanding welfare fund contribution

first before accepting the vehicle tax which had become due and

payable. In this view of the matter, it would be unnecessary to dilate

on the argument regarding validity of Section 15 of the 1976 Act

because of lack of Presidential assent after coming into effect of the

1988 Act.

41. We cannot be oblivious about the legislative intent for enacting

the 1985 Act and the amendment effected thereto in 2005. The same

is a beneficial legislation with avowed objective to ensure strict

compliance of payment of welfare fund contribution to protect the

workers of the commercial operations undertaken by the vehicle

owners/permit-holders pursuant to a permit issued under the 1988

Act, and is to reach out to such workers who are typically

unorganised and a part of informal workforce. Neither the

provisions of the 1985 Act or the 1976 Act have the effect of

interdicting the permit issued under the 1988 Act. The real intent

and purpose behind these provisions is to restate the mandate

stated in the 1988 Act that the vehicle cannot be used on road

without a valid permit and payment of vehicle tax up to date.

42. A priori, we have no hesitation in concluding that the provisions

of the 1976 Act and the 1985 Act, enacted by the State Legislature,

are only intended to ensure that the vehicle owner/permit-holder

does not remain in arrears of either the welfare fund contribution or

the vehicle tax both payable under the State enactments. These

provisions are in no way in conflict with the law made by the

Parliament (1988 Act). The State enactments do not create any new

liability or obligation in relation to the permit issued under the 1988

Act (Central legislation), but it provides for dispensation to ensure

timely collection of the welfare fund contribution as well as vehicle

tax payable by the same vehicle owner/permit-holder.

43. While parting, we must note that the writ petitioners through

their counsel had fairly accepted during oral argument that after the

2005 amendment, for all these years they have been following the

dispensation provided under the State legislations without

exception. In that sense, the challenge has become academic. Be

that as it may, we have negatived the stand taken by the writ

petitioners regarding the validity of the amended provisions being

repugnant to the law made by the Parliament.

44. In view of the above, these appeals must fail and the same are

dismissed with costs.

Pending application(s), if any, stands disposed of.

……………………………J.

(A.M. Khanwilkar)

……………………………J.

(Abhay S. Oka)

……………………………J.

(C.T. Ravikumar)

New Delhi;

July 27, 2022.

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ALL KERALA DISTRIBUTORS ASSOCIATION, KOTTAYAM UNIT, REPRESENTED BY ITS SECRETARY VERSUS THE STATE OF KERALA & ANR.

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