The Hindu Business Line : Road rollers that failed to steamroller

LET us roll back to 1993 when the Andhra Pradesh Government hiked road tax on vehicles. The Road Rollers Owners Welfare Association in the state objected to the rise and challenged the validity of the order. When it was held that the Government order was valid, the association argued that road rollers were not motor vehicles under the Motor Vehicles (MV) Act, 1988 and, hence, no tax could be levied on them.

At the Andhra Pradesh High Court, things turned favourably for the road rollers. The court looked at the definitions of motor vehicle and light motor vehicle in the MV Act and concluded that that a road roller was not suitable for use on roads because it was meant only for laying roads and not for transporting people or goods from place to place. Connotation of a vehicle meant a conveyance for carrying people or goods, opined the High Court, before ruling that no tax could be imposed on road rollers.

The Andhra Pradesh Government was not inclined to leave the matter at that, and so the case reached the apex court. The decision that came in April, and reported in the latest issue of Supreme Court Revenue Cases (www.cliofindia.com), reversed the High Court's decision.

In their judgment, Justices S. N. Variava and H. K. Sema noted that the AP Motor Vehicles Taxation Act, 1963, did not define `vehicle', but adopted what was in the MV Act. The two definitions that came under focus were those that the High Court had dealt with, viz. motor vehicle and light motor vehicle.

Vehicle definitions

`Motor vehicle' or `vehicle', according to Section 2(28) of the MV Act, 1988 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.

`Light motor vehicle', as per Section 2(21), is a transport vehicle or omnibus, the gross vehicle weight of either of which, or a motorcar or tractor or road roller, the un-laden weight of any of which, does not exceed 7,500 kg.

The apex court pointed out that road roller was specifically included in the definition of a light motor vehicle. "If a road roller is a light motor vehicle then it is a motor vehicle," said the judges. Where the intention of the legislature is clear and unambiguous, courts cannot ignore the clear wording and hold to the contrary, opined the apex court. "As the Act categorically provides that a road roller is a motor vehicle, we fail to understand how the High Court, even after noticing the definition, could have held that road roller was not a motor vehicle."

The road roller association had relied upon an earlier case, viz. Bolani Ores. There, it had been said that the purpose of the MV Act is basically to provide for transport. Every vehicle cannot be taxed, argued the association; "before a vehicle could be taxed it should be a vehicle which is capable of forming part of the traffic and must be a vehicle which is utilising or using the road for its own purposes." They submitted that merely because a vehicle was capable of moving or was propelled by mechanical power did not mean that it became a motor vehicle which could be taxed. No, said the apex court, because the Bolani Ores case was about dumpers, rockers and tractors, which were not built for being used on road; they were "never used on the roads" and so they were not motor vehicles. But that was not the case of road rollers, said the court. These could only be used on the roads, and were not built for use off the road. "As it is built for use only on the road it is a motor vehicle."

Reasoning on a roll

The High Court had reasoned that road roller was not suitable for use on roads because it was meant only for laying roads. On this, the Supreme Court had this to say: "Undoubtedly, a road roller is meant for repairing roads. This itself shows that it is adapted for use on roads. A road roller is not capable of being used off the road. Merely because its purpose is to repair roads does not mean that it is not suitable or not adapted for use on roads." Thus, the counter-reasoning put the road roller firmly on the road.

Another reasoning of the High Court — that road roller is not meant for transporting people or goods from place to place — was a puzzle to the apex court, because of the implied connotation that vehicle was meant to be a conveyance for carrying people or goods, something that the definition of motor vehicle did not envisage. "Merely because a vehicle does not carry passengers or goods does not mean that it ceases to be a motor vehicle," said the Supreme Court. "So long as it is a vehicle, which is mechanically propelled, and is adapted for use on roads, it is a motor vehicle within the meaning of the Motor Vehicles Act, 1988."

A case of how road rollers could not steamroller through the definitions.

Boxes of biscuits

A few weeks ago the Supreme Court had to discuss the Bihar biscuit case, or more specifically, Parle Biscuits P Ltd vs the State of Bihar. Parle was unhappy that it was not given the benefit of concessional rate of sale tax of 4 per cent on purchase of cardboard or corrugated box (CB) used for packing, but made to suffer sales tax at 10 per cent.

The Deputy Commissioner, Commercial Tax, Patna, was willing to allow packing materials such as plastics and polybags, gunny bags, gum tapes and adhesives, complaint slips, tin containers and pouches but rejected the prayer for including packing materials made out of paper, such as cartons, cardboard and corrugated boxes. At the High Court, it had been held that the view taken by the Department not to include packing materials made out of paper was correct.

Citing a 1989 case of Card Board Products vs State of Bihar, Parle's counsel argued that `cardboard boxes' are different from `cardboard', and that `carton' used in the Notification would not include `cardboard boxes'. The Notification spoke of paper (of all kinds) "including paste board, mill board, straw board, card board, blotting paper, cartridge paper, paper bags, packing paper, cartons, cards and blank registers, note books, exercise books, envelops labels, letter pads, writing tablets and flat files made out of paper."

The State's counsel contended that there was no evidence to show that in common parlance `cardboard' and `cardboard boxes' are different commodities; also, that the government's policy was to protect trees, plants and forests, by encouraging the use of substitutes of paper as packing materials.

The apex court studied dictionary definitions of paper, and opined that cardboard was different from cardboard box. It then analysed if `carton' would include `cardboard box'. There can be no universal standard of difference between the two, said the court, and directed the Deputy Commissioner of Sales Tax to consider the question whether the cardboard box used by Parle came within the definition of `carton'.

A case of boxes and cartons, therefore, carted back to Patna.

Tailpiece

"Our Aviation Minister wants extension of tax holiday on leasing aircraft, so that any payment for lease rentals of aircraft or aircraft engines made by an Indian company for its business of operation of aircraft, to a foreign government or enterprise is exempt from tax in the hands of the recipient... "

"You're talking about taking a flight for the holiday?"

Detaxification@TheHindu.co.in

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