"In exercise of judicial review, court cannot go into legislative wisdom"

The Madras High Court has upheld the increase in motor vehicles tax from Rs. 2000 to Rs. 3000 per seat per quarter for omnibuses with seating capacity of more than 35 persons, with effect from December 1, 2001.

A Division Bench comprising Justices R. Banumathi and T.S. Sivagnanam passed the common order on writ petitions by contract carriage operators challenging the hike in the tax.

The petitioners’ case was that ‘contract carriages’ (vehicles hired solely for carrying passengers) had been discriminated against due to the levy of five or six times the tax imposed on ‘stage carriages’ (vehicles in which passengers pay individual fares for stages of the journey). Use of contract carriages on State roads was very minimal. The levy of the tax of Rs. 3000 per seat per quarter violated Art. 14 of the Constitution and the principles of proportionality. Hence, the petitioners, Tamil Nadu Omni Bus Owners Association and others sought the quashing of a G.O of November 30, 2001, enhancing the rate of tax.

The authorities justified the levy by referring to the expenditure incurred by the Highways Department in respect of construction of roads and bridges and maintenance. In order to reduce the deficit and to manage the expenditure, the tax rate in respect of contract carriages was enhanced. The classification between stage and contract carriages was based on intelligible differentia and the challenge to the tax increase was without basis.

The Bench said a perusal of the actual expenditure incurred and the total revenue collection for 2001-02 to 2011-12, as stated in the counter, it was seen that in the total expenditure incurred by the Highways Department, the deficit was constantly increasing and there was a need for the government to manage the expenditure by decreasing the quantum of deficit.

The government was bound to maintain roads. Without repair of the roads, upkeep, maintenance and provision for depreciation of roads, transportation would become impossible. To reduce the deficit, the government took a policy decision to increase the rate of MV tax on contract carriages.

When the State was already in deficit, how the expenditure/compensatory tax were to be distributed among the users depended upon the legislative wisdom. The petitioners could not complain of differential treatment. In exercise of the judicial review, the court could not go into legislative wisdom.

The court also said that it did not find any arbitrariness in the amendment to the Tamil Nadu Motor Vehicles Taxation Act levying tax on the basis of floor area for contract carriages which carried not more than 35 persons.

The amendment was made during the pendency of writ petitions challenging the hike in the tax rate. As per the amendment, tax was levied on the floor space at Rs. 4900 per square metre of floor area. To prevent evasion of tax by omni buses by providing lesser number of seats, the government took a decision to amend the law on the basis of the floor area, the Bench said.

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