Muthyala Sunil Kumar v. Union of India & Ors.
Judgment
Vikram Nath, J.
1. This is a batch of 117 petitions, including four contempt petitions
which are de-tagged for being listed separately, filed primarily by the
transporters and tour operators under Article 32 of the Constitution
of India assailing the legality of different State Governments levying
and collecting Authorization Fee/Border Tax in violation of All India
Tourist Vehicles (Permit) Rules, 2023. 1 Broadly, there are three
categories of petitions but the relief claimed which is common
in all the petitions, is about the levy and collection of Border
Tax/Authorization Fee.
2. In some cases, there is a challenge to the All-India Tourists Vehicles
(Authorisation of Permit) Rules, 2021 2 as also certain provisions of
Motor Vehicles Act, 1988, however, such petitions were filed prior
to the coming of the Rules, 2023. As such, the reliefs have been
amended seeking directions for compliance of provisions contained
in the Rules, 2023. In some cases, petitioners have also prayed
for refund of the Border Tax/Authorization Fee already realized by
the State Authorities at the time of their vehicles entering the State.
3. Initially, it was the State of Tamil Nadu which was said to be realizing
the Border Tax/Authorization Fee but, later on, several other States
were also complained of realizing similar Border Tax/Authorization
Fee despite the transporters or the vehicles entering the State having
already paid the requisite tax/fee under the Rules, 2023. As such,
other States also became the respondent-parties and notices were
issued to them.
1 The Rules, 2023
2 The Rules, 2021
638 [2024] 7 S.C.R.
Digital Supreme Court Reports
4. The Rules, 2023 superseded the All-India Tourists Vehicles
(Authorization/Permit) Rules, 2021. After the coming into of the Rules,
2023, the power of levying/collecting Border Tax/Authorization Fee by
the State Governments at various border check posts from vehicles
carrying All India Tourists Permit was to be done away with. There
were primarily two objects of bringing in the Rules, 2023. Firstly,
to make the movement of such tourist vehicles across the country
through different States seamless and smooth; and secondly, the
revenue to be generated by the Centre to be proportionately shared
with the State Governments, also taking into account their previous
revenue generation, and also, keeping in mind that their earlier
revenue income was not reduced in any manner.
5. The transporters started facing difficulties and harassment as
alleged at the borders of different States where they were again
being demanded Border Tax/Authorization Fee which has given rise
to the filing of this group of petitions. Such demand of Border Tax/
Authorization Fee was challenged on several grounds ranging from
double taxation; levy being without legal authority; being in violation
of the Rules, 2023 which had been framed under Entry 35 of List
II of the Seventh Schedule to the Constitution of India, and various
other grounds.
6. In all these matters while issuing notices, interim relief was also
granted that the State Governments were restrained from making
any further realization of Border Tax/Authorization Fee.
7. Upon notice, States appeared and filed their counter affidavits. The
submission advanced by the States is that the demand being raised
by them is primarily under the rules framed by the respective State
Governments under Entries 56 & 57 of List II of Schedule VII of the
Constitution. They have defended their competence to frame the
rules, to levy and collect the taxes, which according to them, are in
accordance to law.
8. It is also their submission that the petitioners, in case, had any
grievance ought to have approached the respective High Courts
under Article 226 of the Constitution rather than approaching
this Court under Article 32 of the Constitution. Lastly, and most
importantly, it was contended that State Acts/Rules levying such tax
has not been put to challenge and therefore, the petitions deserve
to be dismissed.
Muthyala Sunil Kumar v. Union of India & Ors.
9. Although counsel for the parties have raised their arguments on merits,
but we are not inclined to go into the merits of the matter at this
stage, as apparently, the fundamental question to be decided would
be whether levy and realization of taxes by the respective states is
covered by the Act and Rules framed by the respective States under
Entries 56 & 57 of List II of Schedule VII of the Constitution or not.
10. 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.
11. We, accordingly, dispose of these petitions without interfering with
the demands being raised by the State Governments while giving
liberty to the petitioners to approach the jurisdictional High Courts
for their reliefs. It is made clear that we have neither entered into
the merits of the matter nor examined the same.
12. 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.
Result of the case: Writ Petitions disposed of.
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