Supreme Court: In a case raising questions on the Constitutional validity of sub-sections (7) and (8) of Section 4 [introduced by way of the Kerala Motor Vehicles Taxation (Amendment) Act, 2005 in the Kerala Motor Vehicles Taxation Act, 1976], Section 15 of the 1976 Act and Section 8A of the Kerala Motor Transport Workers' Welfare Fund Act, 1985 inserted by Act 23 of 2005, the 3-judges Bench of A.M. Khanwilkar*, Abhay S. Oka, and C.T. Ravikumar, JJ., upheld validity of the stated amendments.
Noticeably, the effect of these amendments is to mandate the production of receipt of remittance of welfare fund contribution at the time of making payment of vehicle tax before the Taxation Officer.
Grounds for Challenge
The thrust of the challenge is that the State Legislature by way of stated amendments has effectively bootstrapped the obligation to make a contribution to the workers' welfare fund with the obligation to pay tax for operating motor vehicles.
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, 1988 to paralyse the Stage and Goods Carriage Operation or to undermine the effectiveness of the transport permit provided under the 1988 Act.
The amendments 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) are repugnant to the Central Act.
Findings of the High Court
The Kerala High Court 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. On this analysis, the High Court rejected the challenge and dismissed the writ petitions and writ appeals vide impugned judgment.
Analysis and Findings of the Supreme Court
Whether the Impugned Amendments are Repugnancy to the Central Act?
The Court relied on Thirumuruga Kirupananda Variyar Thavathiru Sundara Swamigal Medical Educational & Charitable Trust, (1996) 3 SCC 15, to hold that it cannot 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 Court noted that Section 81(4) of the Act, 1988 dealing with the power of the Authority to reject an application for the renewal of a permit provides for the grounds on which the renewal of a permit can be rejected which 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.
Though the 1976 Act enacted by the State Legislature 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 under which the Parliament has already enacted 1988 Act—the Court noted that the law made by the Parliament, being 1988 Act, does not touch upon or deal with the field of the 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.
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, the Court opined that obedience to each of the laws (made by the Parliament and State Legislature) is possible without disobeying the other. Hence, arguments regarding repugnancy were held to be devoid of merit.
Bootstrapping of Liabilities of Permit-holder
Noting that the appellants had not disputed their liability to pay the vehicle tax levied under the 1976 Act as well as to pay a contribution towards the workers' welfare fund under the 1985 Act and their real grievance was about compelling them to pay the welfare contribution dues as a precondition for collection of vehicle tax, the Court held that such dispensation cannot be construed as unconstitutional.
Reverting to the 1985 Act enacted by the State Legislature, the Court opined that indisputably, it is welfare legislation ascribable to Entries 23 and 24 of List III — Concurrent List, constituting a fund to promote the welfare of motor transport workers in the State of Kerala. The 1985 Act has been enacted with the objects and reasons 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.
Thus, rejecting the plea of the appellants, the Court stated,
“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 Court further observed that even in the 1988 Act, the permit-holder is obliged to ensure that the vehicle tax is paid regularly and 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.
In the light of above, the Court concluded 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. And that there is nothing wrong with State Legislature making it compulsory to pay outstanding welfare fund contribution first before accepting the vehicle tax which had become due and payable.
In view of the above, the impugned judgment of the High Court was upheld, and the appeals were dismissed with costs.
[All Kerala Distributors Assn. v. State of Kerala, 2022 SCC OnLine SC 919, decided on 27-07-2022]
*Judgment by: Justice A.M. Khanwilkar
Advocates who appeared in this case :
For the Appellants: Senior Advocate K. Radhakrishnan, and Advocate K. Parameshwar
For the State of Kerala: Advocate Abraham Mathews
For Kerala Motor Transport Workers Welfare Fund Board: Senior Advocate P.N. Ravindran
*Kamini Sharma, Editorial Assistant has put this report together.