# 3 57 TATA ENGINEERING & LOCOMOTIVE CO. LTD v. THE SALES TAX OFFICER & REGIONAL TRANSPORT OFFICER, POONA AND ANR

- **Citation:** [1979] 2 S.C.R. 357
- **Court:** Supreme Court of India
- **Decided:** 1978-11-22
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/3-57-tata-engineering-locomotive-co-ltd-v-the-sales-tax-officer-regional-7601
- **Pages:** 6

## Headnote

3 57
TATA ENGINEERING & LOCOMOTIVE CO. LTD.
v.
THE SALES TAX OFFICER & REGIONAL TRANSPORT
OFFICER, POONA AND ANR.
November 22, 1978
JP. N. BtiAGWATl, R. S. SARKAR!.<\ AND S. MURIAZA FAZAL Au, JJ.J
Bon1bay ft.folor Vehicles (Taxation on Passengers) Act, 1958, Section 2(1),
·2(7) arzd 3 real/. with Prea111ble-Whether transport service registered as a
'pril:ale service reliicle' provlding exclusively transport service to employees
.of tht Offll~r conzpany a public serrice )'e/dcle, so as to be exigibfe to passenger
A
B
tax under the Bonrbay Act, 1958.
C
The appellants are a C.Ompany registered under the.i Con1pa1lies ."-ct, 1913
.and provide transport facilities to their ~n1ployces at a nominal
rate
from
-certain pick-up places to their factori~s at Pimpri and Chinchvad in district
·Pone (Maharashtra) in their transport vehicle registered as "private service
"Vehicle" within the meaning of the Bon1bay Motor Vehicles Rules 1959. The
Bombay High Court held that the transport vehicle provided to the employees
D
'by the company \vould be a public service Yehiclc and therefore, the respon·
<lents sought to levy a tax on phssengers under the charging section 3 of the
Bombay Motor Vehicles (Taxation on Passengers) Act, 1958. A challenge
to the said levy having been rejected by the Comn1issioner
of Pune
t11c
appeJJants obtninf'd special leave of this Court.
Aflowing the appeals, the Court
HELD : J. The prell·mblc to the Bon1bay Motor Vehicles (Taxation on
Passengers) Act. 1958 clearly reveals that the dominant object of_ the Act
was to impose tax on certain classes of
public st!rvice vehicles. In other
\vords, the Preamble indicates that vehicles 'f.lbich could not be
termed
as
public service vehicles fell beyond the ambit of the taxing provisic)ns of the
Act.
[o.19G-Hl
2. Though the Act and Rules n1ade thereunder do not define the
term
"public service vehicle", it is clear the.t, from the Preamble of the Act that
·the tax can be 'levied only on passengers who are carried by a stage carriage
\vhich is of the nature of Public Service \'chicle.
[361A-BJ
E
F
3. Section 3 of the Act which authorises the levy of tax on all passengers
carried by road in stage carri11<ges contains two essential ingredients (1) that
G
the trart'iport concerned must carry passengers by road, and (2) that such
passengers mu.st 'he carried in stage carriages, that is to say, as defined
in
·section 2(7) of the Act, passengers n1ust be carried for hire or reward at
separate fares paid by or for individual passengers, either for
the
"-'hole
jotnncy or for stages of the journey.
(360F·G]
4. A combined reading of section 2 (1) wRich defines
'passenger•
and
sectioa 2(7) which defines 'stage carriage' of the Act clear1y indicates that
H
the tax would 'be Ieviable -only if the {'.'11.Ssengers are carried on
a
public
· <;Cn·lce vehicle.
[361A~
358
SUPREME COURT REPORTS
[1979] 2 S.C.R.
A
5. The word 'Public' has got a well known connotation· and
means a
carriage to which any member of the public can have free access on payment of the usual charges. It cannot by any process of reasoning or stretch
of imagination be deemed to include employees of a private company who
are given facilities not as members of the public but as holding a
special
status, na1nely, the employees
of
that
company. Thus, qua
public
the
employees form a separate chlss and
cannot be said to be public as contemB
plated by rule 2(i). [361-C]
c
D
6. In the present case :-
(a) The tr<tnsport service \Vhich \\as re,gistered as
~" pri·vatc sei"vice vehicle
falls squarely within the ambit of the definition of ·'private vehicle
service"
in the llon1bay ~1otor Vehicles Rules. 1959.
l361E1
(b) The transport provided to the employees of the company was reserved
for them only and no other member of the public even if he wanted to pay
full charges could be carried on the said
vehicle.
Jn
these
circumstances,
therefore, it cannot be said that the transport vehicle provided to the em·
ployees by the appellants could be

## Text

3 57
TATA ENGINEERING & LOCOMOTIVE CO. LTD.
v.
THE SALES TAX OFFICER & REGIONAL TRANSPORT
OFFICER, POONA AND ANR.
November 22, 1978
JP. N. BtiAGWATl, R. S. SARKAR!.<\ AND S. MURIAZA FAZAL Au, JJ.J
Bon1bay ft.folor Vehicles (Taxation on Passengers) Act, 1958, Section 2(1),
·2(7) arzd 3 real/. with Prea111ble-Whether transport service registered as a
'pril:ale service reliicle' provlding exclusively transport service to employees
.of tht Offll~r conzpany a public serrice )'e/dcle, so as to be exigibfe to passenger
A
B
tax under the Bonrbay Act, 1958.
C
The appellants are a C.Ompany registered under the.i Con1pa1lies ."-ct, 1913
.and provide transport facilities to their ~n1ployces at a nominal
rate
from
-certain pick-up places to their factori~s at Pimpri and Chinchvad in district
·Pone (Maharashtra) in their transport vehicle registered as "private service
"Vehicle" within the meaning of the Bon1bay Motor Vehicles Rules 1959. The
Bombay High Court held that the transport vehicle provided to the employees
D
'by the company \vould be a public service Yehiclc and therefore, the respon·
<lents sought to levy a tax on phssengers under the charging section 3 of the
Bombay Motor Vehicles (Taxation on Passengers) Act, 1958. A challenge
to the said levy having been rejected by the Comn1issioner
of Pune
t11c
appeJJants obtninf'd special leave of this Court.
Aflowing the appeals, the Court
HELD : J. The prell·mblc to the Bon1bay Motor Vehicles (Taxation on
Passengers) Act. 1958 clearly reveals that the dominant object of_ the Act
was to impose tax on certain classes of
public st!rvice vehicles. In other
\vords, the Preamble indicates that vehicles 'f.lbich could not be
termed
as
public service vehicles fell beyond the ambit of the taxing provisic)ns of the
Act.
[o.19G-Hl
2. Though the Act and Rules n1ade thereunder do not define the
term
"public service vehicle", it is clear the.t, from the Preamble of the Act that
·the tax can be 'levied only on passengers who are carried by a stage carriage
\vhich is of the nature of Public Service \'chicle.
[361A-BJ
E
F
3. Section 3 of the Act which authorises the levy of tax on all passengers
carried by road in stage carri11<ges contains two essential ingredients (1) that
G
the trart'iport concerned must carry passengers by road, and (2) that such
passengers mu.st 'he carried in stage carriages, that is to say, as defined
in
·section 2(7) of the Act, passengers n1ust be carried for hire or reward at
separate fares paid by or for individual passengers, either for
the
"-'hole
jotnncy or for stages of the journey.
(360F·G]
4. A combined reading of section 2 (1) wRich defines
'passenger•
and
sectioa 2(7) which defines 'stage carriage' of the Act clear1y indicates that
H
the tax would 'be Ieviable -only if the {'.'11.Ssengers are carried on
a
public
· <;Cn·lce vehicle.
[361A~
358
SUPREME COURT REPORTS
[1979] 2 S.C.R.
A
5. The word 'Public' has got a well known connotation· and
means a
carriage to which any member of the public can have free access on payment of the usual charges. It cannot by any process of reasoning or stretch
of imagination be deemed to include employees of a private company who
are given facilities not as members of the public but as holding a
special
status, na1nely, the employees
of
that
company. Thus, qua
public
the
employees form a separate chlss and
cannot be said to be public as contemB
plated by rule 2(i). [361-C]
c
D
6. In the present case :-
(a) The tr<tnsport service \Vhich \\as re,gistered as
~" pri·vatc sei"vice vehicle
falls squarely within the ambit of the definition of ·'private vehicle
service"
in the llon1bay ~1otor Vehicles Rules. 1959.
l361E1
(b) The transport provided to the employees of the company was reserved
for them only and no other member of the public even if he wanted to pay
full charges could be carried on the said
vehicle.
Jn
these
circumstances,
therefore, it cannot be said that the transport vehicle provided to the em·
ployees by the appellants could be a public service vehicle in any sense of
the term.
Such a transport vehicle, being not a public service vehicle within
the meaning of the provisions of the Bombay Motor Vehicles Act, the view
taken by the Bombay High Court is clearly erroneous. [361F·G, 3628]
CIVIL APPELLATE JURISDlCTION : Civil Appeal Nos. 204-226 of
1978.
Appeals by Special Leave from the Order dated 29-11-1977
of
E
the Commissioner, Pune Division, Punc in Passenger Tax Appeals
Nos. POI-1/56 AR-12, 24, 27, 32, 42, 50 and 17 other appeals.
F. S. Nariman, Ravinder Narain and K. J. John for the Appellant.
V. S. Desai, M. C. Blu111darc (Jn CA 209 /78) and M. N. Shroff
. ~-
F
for the Respondents.
Ravinder Narain and K. J. John for the Intcrvencrs-Sandvik Asia
Ltd. S. K. F. Cooper Engineering Ltd. Bharat Forge Ltd. and Bajaj
Auto Ltd.
The Judgment of the Court was delivered by
G
FAZAL Au, J.
These appeals by special leave are directed against
an order of the Commissioner of Pune dated 29-11-1977 dismissing
the appeals and holding that the challenge to the tax sought to be
realised by the Revenue was not tenable and
the
appellants were
liable to pay the tax as also the penalty.
The appellants are a company registered under the Companies
H
Act, 1913 and have their factories at Pimpri and Chinchvad in the
District of Pune (Maharashti-a).
The appellants employ as many as
7 ,000 workmen in those factories.
In order to
provide transport
--~ '
,._.,.
'I ,\TA E1'GJNEERING co. v. s.T.o. (Fazed Ali, J.)
35y
facilities to their employees to come to the factories from their respective villages the appe!Jants provided transport which would pick up
passengers from Pune or Khed or Vadgaon or Alandi or places enroute to TELCO Factory at Pimpri or Chinchvad and
back.
For
this journey a nominal charge of Rs. 10 per month was realised
by
the appellants from the employees,
Similarly, for the transport facilities provided to the employees from Pimpri Railway Crossing and
onwards to TELCO factory, they were charged at the rate of Rs. 5
pc: montli,
A charge of Rs. 2 per month was levied for the transport
of employees from Chinchvad Village to TELCO factory at Pimpri
and back.
'!he appellants further averred that these amoun'.s
were
realised hy the appellants only from a particular category of employees
and no char,£es were Jevied in respect of those c1nployees who
were
!n the supervisory grades.
In the course of the arguments:
it
\Vas
pointed out that when the company was prepared to grant free transport facilities to the supervisory staff there was no reason
why
the
same amenities should not be extended to the other employees and
Mr. Nariman, learned counsel for the appellants
frankly conceded
tha'. in future no charges would be realised from the employees and
they would be provided free transport as in the case of supervisory
staff. It is manifest that if the appellants had not levied any charge
at al! for the transport facilities granted to the employees they would
not be exigible to passenger tax.
Mr, Nariman,
however,
argued
that even if a nominal charge is realised from
the employees
that
would not make the transport a public service vehicle carrying passengcn so as to a'.tract the provisions of section 3 which is the charging
section of the Act In our opinion, the contention of
the
learned
counsel is well founded and must prevail.
The Bombay Motor Vehicles (Taxation
on
Passengers)
Act,
1958 hereinafter called the Act is a statute which authorises the levy
of passenger tax.
This Act has been amended several
times
right
from the year 1960 to 1975.
Before analysing the relevant
provisions of the Act, it may .be necessary to extract the Preamble to the
Act which runs thus :-
"Whereas it is expedient to provide for the levy of a
ta' on passengers, carried in certain classes of public service vehicles in the State of Bombay, It is hereby enacted
in the Ninth Year of the Republic of India as follows."
A perusal of the Preamble clearly reveals that the. dominant object
c
K
F
G
•
of the Act was to impose tax on certain classes
of public service
vehicle;'.
l n o'.hcr words, the Preamble indicates that vehicles which
IJ
could not be termed as public service vehicles fell beyond the
ambit
of the taxing provisions of the Act.
A
c
E
£
•
H
360
SUPREME COURT REPORTS
(1979] 2 S.C.R.
\
Section 2( 7) of the Act defines 'stage carriage' thus:-
"' 'stage carriage' means a motor vehicle carrying or
adapted to carry more than six persons excluding the driver,
which carries passengers for hire or reward, at separate
fares paid by or for individual passengers, either for the
whole journey or for stages of the journey, and includes
such a carriage or other omnibus when used as a contract
carriage within the meaning of the Motor Vehicles
Act,
1939".
Section 3 which is the charging section runs thns :-
"3. (1) There shall be levied and paid to the State
Government a tax on all passengers carried by road in
stage carriages at such rate to be fixed by the State Government from time to time by order in the Official Gazette as
wonld yield an amount not exceeding twenty per cent of
the inclusive amount of fares payable to the operator of
a stage carriage.
(2) After calculating the total amount of tax payable
under sub-section ( 1) out of the total amo1mt received by
an operator during each month on account of inclusive fares
in respe~t of the stage carriage or stage caniages held by
him the total amount of the tax shall wherever ncce•sary be
rounded off to the nearest naya paisa, fractions of half a
naya paisa and over being counted as one and less than half
being Ji&rcgardcd".
Thus section 3 authorises the Jcvy of tax on all passengers carried
by roa1..: in s:agc carriages.
This section contains two essential ingredients : (l) that the transport concerned must carry passengers by
road, and (2) that such passengers must be carried in stage carriagcs.
that is to say, as defined in section 2 (7) of the Act, passengers must
be carried for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for
stages o[ the
journey.
Rule 2(iJ of the Bombay Motor Vehicles Rules,
1940 framed
under the Bombay Motor Vehicles Act,
1939 defines
'passenger'
thus:-
"'passenger' for the purposes of'the rules in Chapter IV
means any person travelling in a public service vehicle other
than the driver or the conductor or an employee of the permit holder while on duty".
.
"'~
' -
TATA ENGINEERING co. v. s.T.O. (Fazal Ali, J.)
361
A combined reading, therefore, of rule 2(i) and section 2(7) of
the Act clearly indicates that the tax would be leviable only if the
passengers are carried on a public service vehicle. It is true that the
term 'public service vehicle' has not been defined either by the Act or
by the Rules, but that however does not create any difficulty, because
having regard to the Preamble of the Act we are of the opinion that
the tax can be levied only on passengers who are carried by a stage
carriage which is of the nature of a public service vehicle.
The
word 'public' has got a well known connotation and means a carriage
to which any member of the public can have free access on payment
of the usual charges. It cannot by any process
of reasoning or
stretch of imagination be deemed to include employees of a private
company who are given facilities not as members of the public but as
holding a special status, namely, the employees of that company.
Thus, <Jlla public the employees form a separate class and cannot be
said to be public as contemplated by rule 2(i).
On the other hand, the Bombay Motor Vehicles Rules
1959
define 'private service vehicles' as follows :
"'Private Service Vehicle' means any
omnibus
constructed or adapted to carry more than nine persons excluding the driver and ordinarily used by or on behalf of the
owner of such vehicle for the purpose of carrying person•
A
B
c
D
'for or i1;i. connection \Vith his trade or business, or othenvise
E
than for hire or reward; but does not include a motor vehicle
used solely for Police purposes".
The transport service in the present case which was registered as
a private service vehicle falls squarely within the ambit of the afore-
~aid definition.
Moreover, in the instant case, it is not disputed that
F
the transport provided to the employees of the company was resecved
for them only and no other member of the public. even if he wanted
to pay full charges could be carried on the said vehicle.
In these
<:ircumstances, therefore, it cannot be said that the transport vehicle
provided to the employees by the appellants could be a public service
vehicle in any sense of the term.
Mr. Nariman drew our attention · G
to a number of rules and forms in order to illustrate his point that
private service vehicle was beyond the ambit of the charging section.
In view of 'Vhat we have already said, it is not necessary for us to go
into such meticulous details, because the legal position appears to be
clear enough.
As counsel for the appellants has already undertaken
not to charge any amount from the employees for providing transport
B
facilities, the point has now become more or less
academic.
The
Commissioner appears to have dismissed the appeals of the appellants
5-978SCI/78
- j
B.
362
SUPREME COURT REPORTS
[1979] 2 s.c.it.
as he felt bound by the judgment of the Bombay High Court which
had held that the transport vehicle provided to the employees by the
company would be a public service vehicle. In view of our
findin~
that such a transport vehicle is not a public service vehicle within the
meaning of the provisions of the Bombay Motor Vehicles Act, the
view taken by the Bombay High Court is clearly erroneous and must
be overruled.
For these reasons, therefore, the appeals are allowed and the
order of the Commissioner imposing the tax is set aside.
The appellants would be entitled to one set of costs.
S.R.
Appeals allowed.·
'"'
' i-