Case Note & Summary
The Supreme Court disposed of a batch of 117 petitions filed primarily by transporters and tour operators under Article 32 of the Constitution of India, challenging the levy and collection of Authorization Fee/Border Tax by various State Governments from vehicles holding All India Tourist Permits. The petitioners contended that such levy violated the All India Tourist Vehicles (Permit) Rules, 2023, which superseded the 2021 Rules and aimed to eliminate border taxes by centralizing revenue collection and sharing with States. The petitioners alleged double taxation and harassment at state borders. The Court had earlier granted interim relief restraining States from collecting such fees. However, upon hearing the States, which defended their competence under Entries 56 and 57 of List II of the Seventh Schedule, the Court declined to examine the merits. The Court observed that the State enactments under which the taxes were levied were not challenged by the petitioners. Without challenging the State Acts/Rules, it could not be held that the demand was bad in law. Additionally, the Court noted that the petitioners should first approach their jurisdictional High Courts under Article 226. Accordingly, the petitions were disposed of with liberty to the petitioners to approach the appropriate High Courts. The Court clarified that it had not entered into the merits. The tax already recovered would be subject to the outcome of any future petitions before the High Courts. The petitioners were directed to give undertakings that if they fail in the High Courts, they would make good the demands for the period during which the interim stay operated.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 32 vs Article 226 - Maintainability - Petitioners challenged levy of Border Tax/Authorization Fee by States without challenging the State Acts/Rules under which the levy was imposed - Supreme Court held that since the State enactments were not under challenge, the petitions under Article 32 were not maintainable and petitioners ought to approach jurisdictional High Courts under Article 226 - Held that the fundamental question of whether the levy is covered by State Acts/Rules under Entries 56 & 57 of List II requires examination of State laws, which is best done by High Courts (Paras 9-11). B) Motor Vehicles - All India Tourist Vehicles (Permit) Rules, 2023 - Border Tax/Authorization Fee - The Rules, 2023 aimed to make movement of tourist vehicles seamless and share revenue with States - However, States continued to levy Border Tax under their own Acts/Rules - Supreme Court did not examine merits as State enactments were not challenged - Held that petitioners must challenge State provisions before High Courts (Paras 4-5, 9-10).
Issue of Consideration
Whether the levy and collection of Border Tax/Authorization Fee by State Governments from vehicles holding All India Tourist Permits is valid under the State Acts/Rules framed under Entries 56 & 57 of List II of Seventh Schedule to the Constitution of India, and whether the Supreme Court should entertain petitions under Article 32 without challenging the State enactments.
Final Decision
The Supreme Court disposed of the petitions without interfering with the demands raised by State Governments, granting liberty to petitioners to approach jurisdictional High Courts for relief. The Court did not examine the merits. Tax already recovered is subject to final outcome of High Court petitions. Petitioners to give undertakings to make good demands for the period of interim stay if they fail.
Law Points
- Constitutional Law
- Motor Vehicles Act
- 1988
- All India Tourist Vehicles (Permit) Rules
- 2023
- Entry 35 List II
- Entry 56 List II
- Entry 57 List II
- Article 32
- Article 226
- Double Taxation
- Levy without authority
