http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8

CASE NO.:

Appeal (civil) 4631 of 2000

PETITIONER:

M/s Natwar Parikh & Co. Ltd.

RESPONDENT:

State of Karnataka & Others

DATE OF JUDGMENT: 01/09/2005

BENCH:

S.N. VARIAVA,S.H. KAPADIA & TARUN CHATTERJEE

JUDGMENT:

J U D G M E N T

KAPADIA, J.

The short question which arises for determination in this

civil appeal, by special leave, is whether the taxation authority

under the Karnataka Motor Vehicles Taxation Act, 1957 was

right in taxing the "tractor-trailer" as a separate and distinct

vehicle, different from a tractor and denying exemption sought

by the appellant under section 16 of the said 1957 Act on the

ground that the tractor-trailer was a distinct category of "goods

carriage" requiring permit under section 66 of the Motor

Vehicles Act, 1988.

The brief facts which are relevant to be noticed as under:

The appellant are transporters of heavy equipments using

mechanized carriage depending upon the items to be

transported. During the period 8.12.1989 to 31.3.1990, they

were engaged by Central Power Research Institute of India

(CPRI) to transport for them six units of transformers from

Madras Port to its site at Bangalore. The goods were to be

lifted from Madras Port and transported to CPRI at Bangalore

by vehicular transport mode through the States of Tamilnadu,

Andhra Pradesh and Karnataka. In the matter of transportation

of over-dimensional cargo, the appellant made use of a drawing

vehicle, called by the appellant as a tractor to push/pull the

trailers loaded with the abovementioned equipments.

Between 8.12.1989 and 11.1.1990, three units of the

tractor-trailer carrying transformers entered the State of

Karnataka via Tamilnadu and Andhra Pradesh.

On 18.1.1990, on account of the entry of three units of

tractor-trailer, the taxation authority issued four demand notices

calling upon the appellant to pay a sum of Rs.5.69 lacs as tax

under section 3(2) read with item 10 of part B of the schedule to

the said 1957 Act on the ground that the said three units were

transport vehicles, which required permits under section 66 of

the Motor Vehicles Act, 1988 and that the appellant was liable

to pay the said tax on the weight(s) of the three units.

Being aggrieved by the confirmation of the demand dated

7.2.1990, the appellant moved the Deputy Commissioner of

Transport, in appeal.

By his order dated 30.6.1990, the Deputy Commissioner

of Transport held that although the tractor and the trailer were

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8

separate independent motor vehicles, separately registrable, the

tractor-trailer as a unit was a different category of "goods

carriage" requiring permit under section 66 of the Motor

Vehicles Act, 1988, which was not obtained and, therefore, the

appellant was not entitled to the benefit of exemption under

section 16 of the Taxation Act, 1957.

Being aggrieved by the said order dated 30.6.1990, the

appellant herein moved the Karnataka High Court by way of

writ petition no.17851 of 1990. In the writ petition, the

appellant pleaded that its tractors and trailers were registered in

the State of Maharashtra as non-transport vehicles and transport

vehicles respectively; that they had obtained national permits

for their trailers under section 88(12) of the M.V. Act, 1988

which enabled them to ply trailers in the State of Karnataka;

that tractors and trailers, though motor vehicles, were separately

defined under section 2(44) and under section 2(46) of the M.V.

Act, 1988; that under section 46 of the M.V. Act, a certificate of

registration was issued in respect of such vehicles which was

effective for the whole of the country (including State of

Karnataka) and that if the contention of the department is

upheld that the tractor-trailer is a distinct and separate vehicle,

distinct from the tractor, it would undermine and violate section

46 of the M.V. Act; that the registration of a vehicle in one

State shall be effective and in force throughout India.

By judgment and order dated 27.3.1998, the learned

single judge held that the tractor by itself was not a "transport

vehicle" but if it was used for carrying goods or passengers then

it became a "goods carriage" as defined under section 2(14) and

consequently, a transport vehicle under section 2(47) of the

M.V. Act; that the trailer by itself was inert and had to be

pulled by some motor vehicle; that if the tractor is used for

carrying goods with the aid of a trailer, it will constitute a

"goods carriage" under section 2(14) and consequently, a

transport vehicle under section 2(47) of the M.V. Act liable for

permit under section 66 of that Act. In the circumstances, the

learned single judge dismissed the writ petition.

Aggrieved by the decision of the learned single judge, the

appellant carried the matter in appeal to the division bench of

the Karnataka High Court by way of writ appeal no.2324 of

1998.

By impugned judgment dated 23.9.1999, the division

bench of the High Court held that in the present case, the

appellant had obtained national permit for the trailers but did

not obtain permits for the tractor-trailer combination under

section 66 of the M.V. Act; that, under section 66, permits were

required to be obtained for such combinations as they came

under the definition of "goods carriage" under section 2(14) and

consequently, under definition of "transport vehicle" under

section 2(46) of the M.V. Act; that any vehicle though not

constructed or adapted to carry goods became a "goods

carriage" when it was used for carrying the goods and,

therefore, the tractor-trailer combination would attract section

66 of the M.V. Act, requiring the appellant to obtain permits for

their combination(s) and since the appellant failed to obtain

such permits, the appellant became liable to pay tax under

section 3 of the Taxation Act, 1957, notwithstanding

registration of tractors and trailers, as separate units, in the State

of Maharashtra. For the above reasons, the High Court

dismissed the writ appeal filed by the appellant. Hence, this

civil appeal.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8

Mr. Chitale, learned counsel for the appellant submitted

that the tractors of the appellant are registered in Maharashtra as

"non-transport vehicle" whereas the trailers are registered in

Maharashtra as "transport-vehicles"; that the trailers have been

given national permits under section 88(12) of the M.V. Act,

which enables them to ply as "transport vehicles" in the State of

Karnataka; that the word "tractor" is defined in section 2(44) of

the said 1988 Act, whereas the word "trailer" is defined in

section 2(46) of the said 1988 Act; that a certificate of

registration issued under section 46 of the 1988 Act was

effective throughout India and if the contention of the taxation

authority in the present case is upheld, it shall undermine the

guarantee given under section 46 of the said 1988 Act to the

effect that registration of a vehicle in one State shall be

effective and in force throughout India. Learned counsel

submitted that in a zonal meeting of transport commissioners of

Maharashtra and Karnataka had agreed to treat the tractor as a

non-transport vehicle and, therefore, it was not open to the

taxation authority to say that the tractor-trailer was a transport

vehicle. Learned counsel submitted that a tractor is used to pull

a trailer or several trailers together on one occasion and it can

also be used to pull another set on combination of trailers on

other occasion and, therefore, the tractor-trailer combination is

not a fixed or a permanent combination. Learned counsel

submitted that the tractors are of towing type and they differ

from "articulative vehicles" inasmuch the trailers are attached

by tow bars and are not superimposed on the tractor and

accordingly no part of the load of the trailers is carried by the

tractor. It was further submitted on behalf of the appellant that

the tax authorities have sought to tax the tractor-trailer

combination under item 10 of part-B of the schedule to the

Taxation Act, 1957. According to the learned counsel, item 10

imposes a tax on motor vehicles used for haulage and does not

tax a tractor-trailer combination; that item 10 of Part B does not

tax a combination of tractor-trailer per se but only taxes a

tractor alone which is in the non-transport category and that if a

tractor was a transport vehicle, it would be taxable under item 3

of Part B of the schedule to the Taxation Act. Learned counsel

further submitted that section 3 of the Taxation Act is the

charging section which levies tax on all motor vehicles suitable

for use on the road; that in the present case, since the motor

vehicle was used for a period not exceeding 30 days, the tax

became leviable under section 3(2), but for the exemption

granted to non-transport vehicle and the reciprocal agreement

not to tax transport vehicles. In this connection, learned

counsel has placed reliance on the notification issued by the

State of Karnataka on 12.10.1959 under section 16 of the 1957

Act. Learned counsel submitted that the tractors are registered

in the State of Maharahstra as non-transport vehicles because

they cannot carry goods on it and because its purpose is only to

draw and haul another goods carriage such as a "trailer". On

the other hand, according to the learned counsel, the trailers are

registered in the State of Maharashtra as transport vehicles

because they carry goods on it; that tractors and trailers are

separately registered as motor vehicles; that once the State of

Maharashtra has recognized tractors as coming under non-

transport category vide registration certificates issued by it, it

was not open to the tax authorities in the State of Karnataka to

go behind the registration certificates issued by the State of

Maharashtra which conclusively established that tractors were

non-transport vehicles entitled to exemption under the above

notification dated 12.10.1959; that the effect of treating the

tractor as transport vehicle while interpreting exemption

notification amounts to reopening of the registration made

under the said 1988 Act, which was not permissible in law and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8

that the taxation authority under the Taxation Act cannot usurp

the authority vested in the registering authority under section 41

of the M.V. Act, 1988. Learned counsel submitted that it was

not open to the taxation authority to create a new category of

motor vehicles requiring registration which function is that of

the registering authority under the M.V. Act, 1988; that once

the taxation authority was satisfied that the tractor was

registered in the State of Maharashtra in the non-transport

category then the same ought to have been accepted by the

taxation authority under section 16 of the 1957 Act.

Learned counsel next urged that the tractors are of two

types. The first type of tractor is designed and constructed by

the manufacturer for exclusive use of towing, pulling or

hauling. These are classifieds as non-transport vehicles by the

Central Government vide notification dated 19.6.1992. These

types of tractors are not required to take permits under section

66 of the 1988 Act as they are not transport vehicles. The

second type of tractors are called prime movers. They are

designed and constructed to carry part of the load of the trailer.

They are articulative vehicles. They require permit and fitness

certificates applicable to transport vehicles. Learned counsel

submits that if the argument of the department in the present

case is accepted, the distinction between "articulative vehicle"

and a "tractor" of the first type which is designed only to

pull/haul would be obliterated. Learned counsel further

submitted that the Central Government has issued notification

dated 19.6.1992 under section 41(4) of the 1988 Act by which it

has classified motor vehicles into transport and non-transport

vehicles; and that under the said notification, trailers have been

classified as transport vehicles whereas tractors have been

classifieds as non-transport vehicles. Learned counsel

submitted that the said notification is binding on the taxation

authority and, therefore, the taxation authority was not entitled

to embark upon the classification of motor vehicles in the

process of interpreting exemption notification under the

Taxation Act. The learned counsel, therefore, submitted that

the taxation authority under the Taxation Act was not entitled to

create a new category of vehicle and insist on compliance of

section 66 of the M.V. Act while denying exemption to the

appellant.

At the outset, we may point out that we are concerned

with the period 1989-90 in this matter.

To appreciate the above arguments, we have to consider

the Schemes of the Taxation Act, 1957 and the M.V. Act, 1988.

The Taxation Act has been enacted to consolidate and

amend the law relating to the levy of tax on motor vehicles in

the State of Karnataka. Under section 2(b) "taxation authority"

is defined to mean such officer as may be pointed out by the

State Government to exercise the powers and functions of the

Taxation Authority under the Act. Under section 2(j), it is

provided that the words and expressions used but not defined in

the Taxation Act shall have the meaning assigned to them in the

M.V. Act, 1988. Section 3 is in Chapter II, which deals with

levy of tax. It is a charging section. It states that a tax shall be

levied at the rates specified in part A of the schedule to the Act.

It is a levy on all motor vehicles suitable for use on roads.

Under the second proviso, it is laid down that Tractors and

Trailers owned by the agriculturists or exclusively used for

agricultural operations shall be liable to pay tax at the rates

specified in part A2 of the schedule. Section 3(2) begins with a

non-obstante clause. It states that notwithstanding anything

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8

contained in section 3(1), taxes at the rates specified in part B

of the schedule shall be levied on motor vehicles suitable for

use on roads, which are in the State for periods shorter than a

quarter, but not exceeding thirty days. In section 3(3), it is inter

alia laid down that in the case of motor vehicles in respect of

which reciprocal agreement relating to taxation is entered into

between the Government of Karnataka and any other State

Government, the levy of tax shall, notwithstanding anything

contained in the Act, be in accordance with the terms and

conditions of such reciprocal agreement. Section 4 deals with

payments of tax. It inter alia provides that the tax levied under

section 3 shall be paid in advance by the registered owner or

person having possession or control of the motor vehicle, for a

quarter, half-year or full year at his choice. It shall be paid in

advance within fifteen days from the commencement of such

quarter, half-year or year as the case may be. Under section 6,

every registered owner of a motor vehicle liable to tax under the

Act is required to sign a declaration in the prescribed form,

giving the prescribed particulars to the taxation authority and

shall pay to such authority the tax in respect of such vehicle.

Under section 6(2), when a motor vehicle liable to tax under the

Act is altered, the registered owner or person in possession of

such vehicle shall be liable to pay additional tax under section

8. The owner is also required to fill up and sign addition

declaration in the prescribed form showing the nature of

alteration made and containing the prescribed particulars.

Section 7 deals with refund of tax. Section 8 deals with

payment of additional tax.

On examination of the provisions of the Taxation Act, we

find that the principle underlying therein is, that, it is the use of

the motor vehicle on the given occasion which determines the

category of the motor vehicle, whether it is adapted for that

purpose or not.

Under section 3, levy of tax is on all motor vehicles

suitable for use on the roads. Therefore, under the proviso,

tractors and trailers used in the farms are excluded as they are

not used on the roads. The expression "suitable for use on

roads" finds place in section 3(1) as well as in entry 57 list II of

the seventh schedule to the Constitution. Therefore, tramways,

railways and farm machinery though mechanically propelled

are excluded as they are not suitable for use on roads.

Moreover, section 3 of the Taxation Act and its explanation

have to be construed on their own force. The combined effect

of sections 3, 4, 6, 7 and 8 of the Taxation Act is that the State

is empowered to levy tax on all motor vehicles which are

designed and manufactured for use on the roads.

In the case of State of Mysore v. Syed Ibrahim reported

in AIR 1967 SC 1424, the owner of a motor vehicle carried

eight passengers in his car and collected Rs.5/- from each of

them. He was charge-sheeted under section 42(1) of the M.V.

Act, 1939 (section 66 of the MV Act, 1988) for having used the

car as a "transport vehicle" without the permit required under

section 42(1). The State contended before this Court that

though the motor vehicle was registered as a motor-car, if it was

used for a purpose mentioned in section 42(1), namely, carrying

passengers for hire, the motor vehicle on that occasion must be

said to have been used as a transport vehicle and if so used

without a permit, there would be a breach of section 42(1).

[Underlining supplied by us]. Accepting this contention, this

Court held that the levy of tax under section 3 on motor

vehicles depended upon the use of the vehicle to which the

vehicle was put; that the tax was leviable on the basis of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8

actual or intended use; that it is the use of the motor vehicle on

the given occasion, which decided the category of the motor

vehicle, whether it is adapted for that purpose or not.

Therefore, even if a motor vehicle was occasionally used as

"goods carriage", it must be regarded when so used as a "goods

carriage" and, therefore, a "transport vehicle" and if it was so

used in breach of section 42(1), the owner or the person who

uses it would be liable to punished under section 42(1) of the

M.V. Act, 1939, which, as stated above, requires every owner

of a motor vehicle to obtain a permit.

In the case of State of Karnataka v. K. Gopalakrishna

Shenoy & Anr. reported in AIR 1987 SC 1911, this Court held

that section 3(1) of the Taxation Act confers a right upon the

State to levy a tax on all motor vehicles which are designed for

use on the roads, at the rates prescribed, without reference to

the road worthy conditions of the vehicle or otherwise. In the

said judgment, it has been further held that the explanation to

section 3(1) contains a deeming provision and its effect is that

so long as the certificate of registration of a motor vehicle is

current, it must be deemed to be a vehicle suitable for use on

the roads, which expression finds place in entry 57 of list II of

the seventh schedule to the Constitution. It has been further

held that the consequence of the said explanation to section 3(1)

is that the owner is obliged to pay the tax in advance as long as

the certificate of registration is current, irrespective of the

condition of the vehicle for use on the roads and irrespective of

the fact whether the vehicle has a certificate of fitness under the

Motor Vehicles Act. In the said judgment, it has been laid

down that section 3(1) of the Taxation Act and its explanation

have to be construed on their own force and not with reference

to section 38 of the M.V. Act, 1939 (section 56 of the MV Act,

1988) which dealt with certificate of fitness read with section

22 of the M.V. Act, 1939 (section 39 of the MV Act, 1988)

which dealt with the certificate of registration. Therefore, one

has to read sections 3 and 4 of the Taxation Act on their own

force and not with reference to the provisions of the M.V. Act

dealing with registration of motor vehicles and issuance of

fitness certificate.

On reading the aforestated judgment, it is clear that the

categorization of motor vehicle for taxation under the 1957 Act

will depend upon the use of the motor vehicle on the given

occasion, whether it is adapted for that purpose or not.

Therefore, in our view, the categorization of tractor-trailer by

the taxation authority has been rightly made based on the use of

the motor vehicle on the given occasion and, therefore, there is

no merit in the argument advanced on behalf of the appellant

that the taxation authority cannot go behind the certificate of

registration issued by the authorities in the State of

Maharashtra. In this connection, we may further point out that

a tractor-trailer consists of a tractor which contains a cab or a

driver's seat and a compartment with a sleeping berth, the

engine and the hood carried on two axles or four axles, as the

case may be. The trailer is a separate box car attached to the

tractor by what is called as the fifth wheel. This meaning is

given in the technical dictionary. The point to be noted here is

that the Motor Vehicles Act, 1988 replaced the 1939 Act in

order to rationalize certain definitions with the additions of new

definitions of new types of vehicles. Under section 61 of the

1988 Act, which comes within Chapter IV dealing with

registration of motor vehicles, registration of trailers is made

compulsory. Under section 61(2), the registration mark

assigned to a trailer is required to be displaced on the side of the

drawing vehicle. In the present case, we are not concerned with

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8

tractors in the conventional sense. Even the legislature has used

the word "drawing vehicle" in place of tractors. Under section

61(3), it is provided that no person shall drive a motor vehicle

to which a trailer is attached unless the registration mark of the

motor vehicle is displayed on the trailer. Similarly, under

section 66 in Chapter V which refers to control of transport

vehicles, no owner of a motor vehicle can use the vehicle as a

transport vehicle carrying passengers or goods without a permit.

Under section 66(2), the holder of a goods carriage permit may

use the vehicle for drawing any trailer. Therefore, under the

M.V. Act, 1988, the Parliament has kept in mind the existence

of a vehicle classifiable as "tractor-trailer".

Lastly, it can be pointed out that the M.V. Act, 1988 is an

Act to consolidate and amend the law relating to the motor

vehicles. It deals with various topics like registration of motor

vehicles, licensing of drivers of motor vehicles, control of

transport vehicles etc. However, the taxation is not the subject

matter of the M.V. Act, 1988. Taxation is governed by the

Taxation Act, which falls under entry 57 list II of the seventh

schedule to the Constitution. Taxation is governed by a

separate Code which in the present case happens to be the

Karnataka Motor Vehicles Taxation Act, 1957 and as held by

this Court in the case of K. Gopalakrishna Shenoy (supra), the

provisions of sections 3 and 4 of the Taxation Act have to be

construed on their own force and not with reference to the

provisions of registration or fitness certificate under the M.V.

Act, 1988.

The question still remains as to whether the taxation

authority was right in categorizing tractor-trailer as a separate

assessable entity and whether that authority was right in calling

upon the appellant to obtain permit under section 66 of the

M.V. Act, 1988.

In order to answer this issue, we have to examine briefly

section 2, which is the definition section in the M.V. Act, 1988.

In that connection, we reproduce herein below the following:

2. Definitions.- In this Act, unless the context

otherwise requires,\026

(14) "goods carriage" means any motor vehicle

constructed or adapted for use solely for the

carriage of goods, or any motor vehicle not

so constructed or adapted when used for the

carriage of goods;

(28) "motor vehicle" or "vehicle" means any

mechanically propelled vehicle adapted for

use upon roads whether the power of

propulsion is transmitted thereto from an

external or internal source and includes a

chassis to which a body has not been

attached and a trailer; but does not include a

vehicle running upon fixed rails or a

vehicle of a special type adapted for use

only in a factory or in any other enclosed

premises or a vehicle having less than four

wheels fitted with engine capacity of not

exceeding twenty-five cubic centimetres;

(44) "tractor" means a motor vehicle which is

not itself constructed to carry any load

(other than equipment used for the purpose

of propulsion); but excludes a road-roller;

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8

(46) "trailer" means any vehicle, other than a

semi-trailer and a side-car, drawn or

intended to be drawn by a motor vehicle;

(47) "transport vehicle" means a public service

vehicle, a goods carriage, an educational

institution bus or a private service vehicle."

Section 2(28) is a comprehensive definition of the words

"motor vehicle". Although, a "trailer" is separately defined

under section 2(46) to mean any vehicle drawn or intended to

be drawn by motor vehicle, it is still included into the definition

of the words "motor vehicle" under section 2(28). Similarly,

the word "tractor" is defined in section 2(44) to mean a motor

vehicle which is not itself constructed to carry any load.

Therefore, the words "motor vehicle" have been defined in the

comprehensive sense by the legislature. Therefore, we have to

read the words "motor vehicle" in the broadest possible sense

keeping in mind that the Act has been enacted in order to keep

control over motor vehicles, transport vehicles etc. A combined

reading of the aforestated definitions under section 2,

reproduced hereinabove, shows that the definition of "motor

vehicle" includes any mechanically propelled vehicle apt for

use upon roads irrespective of the source of power and it

includes a trailer. Therefore, even though a trailer is drawn by a

motor vehicle, it by itself being a motor vehicle, the tractor-

trailer would constitute a "goods carriage" under section 2(14)

and consequently, a "transport vehicle" under section 2(47).

The test to be applied in such a case is whether the vehicle is

proposed to be used for transporting goods from one place to

another. When a vehicle is so altered or prepared that it

becomes apt for use for transporting goods, it can be stated that

it is adapted for the carriage of goods. Applying the above test,

we are of the view that the tractor-trailer in the present case

falls under section 2(14) as a "goods carriage" and

consequently, it falls under the definition of "transport vehicle"

under section 2(47) of the M.V. Act, 1988.

In the present matter, we were concerned with taxing of

tractor-trailer unit and not with the question as to whether such

a vehicle would fall under item 3 or 10 of part B of the schedule

to the Taxation Act. Hence, we are not required to go into that

question.

Accordingly, we find no infirmity in the impugned

judgment and consequently, we dismiss this civil appeal with

no order as to costs.