Supreme Court Upholds Kerala Motor Vehicles Taxation Act Requiring Collection Of Welfare Funds From Transport Vehicle Owners

The Bench of Justice AM Khanwilkar, Justice Abhay S. Oka and Justice CT Ravikumar observed that the provisions of the 1976 Act and 1985 Act enacted by the State Legislature, are intended to ensure that the vehicle owner/permit holder does not remain in arrears of either the welfare fund contribution or the vehicle tax payable under the tax enactments. In this context, the Court further held –

"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."

Counsel K. Parameshwar appeared for the Appellants, Senior Counsel K. Radhakrishnan appeared for the Appellants in the connected matters, Counsel Abraham Mathews appeared for the State of Kerala, Senior Counsel P.N. Ravindran appeared for Kerala Motor Transport Workers Welfare Fund Board before the Apex Court.

Appeals were preferred in this case before the Supreme Court challenging 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 1976 Act and Section 8A of the 1985 Act.

The Appellants had contended before the Apex Court 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 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.

Section 15 of 1976 Act states 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.

Subsections (7) and (8) of the 1976 Act and Section 8A of 1985 mandate the receipt of remittance of welfare fund contribution at the time of making the payment of vehicle tax before the Taxation Officer.

The Division Bench of the High Court had negatived the challenge to the impugned provisions and upheld their constitutional validity. The High Court had opined that there was no lack of legislative competence in the State Legislature and that the 1976 Act and 1985 Act fall substantially within the powers expressly conferred upon the State Legislature which had enacted both the legislations. 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.

The Apex Court considered the argument about repugnancy owing to the application of the State laws to the vehicle permit issued under the law made by Parliament and noted the relevant provisions of the 1988 Act and 1976 and 1985 Act. The Court thus observed –

"…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."

The Court further noted that 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.

"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," the Court opined.

The Court held that the State enactments are complementary and can be given effect to without any disobedience to the Central legislation.

The Bench also added that the real grievance in the 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. In this context, the Court held that such dispensation cannot be construed as unconstitutional.

In the light of these observations, the Court dismissed the appeals with costs.

Cause Title - All Kerala Distributors Association, Kottayam Unit, Represented By Its Secretary v. The State of Kerala & Anr.