Supreme Court Asks All India Tourist Permit Holders To Approach HCs Challenging States' Levy Of Border Tax On Vehicles

The Supreme Court on Tuesday (July 9) disposed of a batch of writ petitions filed by transporters and tour operators challenging the action of various State Governments in levying Authorization Fee/Border Tax in violation of All India Tourist Vehicles (Permit) Rules, 2023.

The Court refused to consider the matter on merits and disposed of the petitions giving liberty to the petitioners to raise their grievances before the respective jurisdictional High Courts. 

The petitions were filed initially when the State of Tamil Nadu started levying Border Tax/ Authorization Fee on buses having All India Tourist Permit. Later, certain other States also followed.

The States contended that they are competent to levy and collect such charges as Entries 56 & 57 of List II of Schedule VII of the Constitution. These entries deal with the power of the States regarding taxes on goods and passengers carried by road or on inland waterways and taxes on vehicles suitable for use on roads.

The petitioners contended that the All India Tourist Vehicles (Permit) Rules, 2023, were framed by the Central Government with the objective of ensuring smooth and seamless transport of vehicles across State borders. Moreover, the revenue generated by the Central Government under these rules are to be proportionately shared with the States, the petitioners contended.

The Supreme Court opined that so long as the respective State Rules are not under challenge, the actions of the States cannot be said to be bad in law. It further said that the High Court ought to be approached in the first instance.

The bench comprising Justices Vikram Nath and Satish Chandra Sharma observed :

"The State enactments, rules and regulations being not under challenge, it cannot be said that the demand of Border Tax/Authorization Fee at the borders by the respective State Governments is bad under law. The petitioners, in order to succeed, have to consider challenging the State provision contained in the Act. There is another reason why we are not entertaining the matters on merit is that the petitioners ought to have first approached their jurisdictional High Courts to challenge their respective State enactments."

The Court clarified that it has not entered into the merits of the matter. 

"Insofar as the tax already recovered, the same would be subject to final outcome of the petitions that may be filed before the High Courts. Insofar as the period of interim order passed by this Court is concerned, the petitioners would give undertakings before the High Courts that, in case they fail, they will make good on demands which would have been raised for the period for which the stay has been enjoyed," the Court observed in conclusion.

Recently, another bench of the Supreme Court passed an interim order directing the State of Tamil Nadu to not hinder the passage of tourist buses having All India Permit.

Case Title : Muthyala Sunil Kumar vs Union of India and connected cases.

Citation : 2024 LiveLaw (SC) 450

Click here to read the judgment