'Road Tax' Paid At Time Of Purchase Of Vehicle & 'Toll Tax' Paid On Highway Do Not Amount To Double Taxation: Telangana High Court
The Telangana High Court recently ruled that the road tax paid under the Motor Vehicles Act while purchasing the cars, and collection of toll tax at National Highway Toll Booths do not amount to double taxation. Issues raised by Petitioners in the PIL The petitioners, who were advocates, had filed the writ petition by way of Public Interest Litigation stating that they were owners...
The Telangana High Court recently ruled that the road tax paid under the Motor Vehicles Act while purchasing the cars, and collection of toll tax at National Highway Toll Booths do not amount to double taxation.
Issues raised by Petitioners in the PIL
The petitioners, who were advocates, had filed the writ petition by way of Public Interest Litigation stating that they were owners of motor vehicles, they had paid road tax at the time of purchase of the vehicles and the respondents were compelling them to pay toll tax which was in addition to the lifetime tax paid by the petitioners. The petitioners wanted the payment of toll tax to be declared as illegal and unjust.
The petitioners had also raised a grievance that toll-tax was not being paid by certain dignitaries and the exemption is in violation of Article 14 of the Constitution of India.
Response by NHAI
The National Highways Authority of India (NHAI) had stated that keeping in view the financial crunch which was in the way of development of Highways, the Central Government took a policy decision in order to ensure that funds were made available. By virtue of this, Section 8A was incorporated into the National Highways Act, 1956
The statutory provision empowered NHAI to enter into an agreement with any person in relation to the development and maintenance of the whole or part of the National highway. It also empowered any person, with whom such agreement had been entered into, to collect and retain fees for services or benefits rendered by him as the Central Government may provide by Notification having regard to the expenditure involved in building, maintenance, management and operation of the National Highway, interest on capital invested, reasonable return, volume of traffic and period of such agreement.
Reliance was placed on State Lorry Owners' Federation, Tamilnadu v. the Superintending Engineer, AIR 1999 Mad 181, wherein it was held that collection of tax under the Motor Vehicles Taxation Act and levy of fees under the National Highway Rules do not amount to double taxation.
Court's observations
The court observed that the Government of India took a policy decision by adding Section 8A under the National Highways Act in order to provide road infrastructure throughout the country by way of Public Private Partnership (PPP) in the matter of construction, widening, upgradation and strengthening of roads. Even the Rules framed under the National Highways Act provide for collection of Toll Tax such as the National Highways (Collection of fees), The National Highways Fees (Determination of rates and Collections) Rules, 2008. Certain dignitaries are also clearly exempted from payment of fee as provided in Rules.
The Petitioner had not challenged the constitutional validity of Section 8A of the National Highways Act or the Rules thereunder. Therefore, the action of NHAI which is in consonance with the Act and Rules could not be interfered with.
The other important aspect was that service roads were available adjoining Highways and short distance travelers could freely avail the facility of service roads. Furthermore, in State Lorry Owners; Federation Tamil Nadu v. Superintending Engineer, 2001 the Madras High Court upheld the collection of fees towards the construction of bridges and roads.
Resultantly, the Court did not find any reason to grant the reliefs as no case was made out for interference in the matter. Therefore, the Public Interest Litigation was dismissed.
Case Title: D. Vidya Sagar v. Union of India and 4 other
Citation: 2022 LiveLaw (AP) 24