Supreme Court upholds validity of provisions of Kerala Motor Vehicles Taxation Act, Kerala Motor Transport Workers’ Welfare Fund Act

The Supreme Court last week upheld the constitutional validity of the provisions of the Kerala Motor Vehicles Taxation Act, 1976 and the Kerala Motor Transport Workers’ Welfare Fund Act, 1985, which club the mandatory nature of paying motor vehicle tax with contribution to the worker welfare fund for the sector [All Kerala Distributors Association Kottayam v State of Kerala & Anr.].A bench of Justices AM Khanwilkar, AS Oka, and CT Ravikumar held that the provisions in question are not inconsistent with the Motor Vehicles Act, 1988 enacted by the parliament. "A priori, we have no hesitation in concluding that the provisions of the 1976 Act and the 1985 Act, enacted by the State Legislature, are only intended to ensure that the vehicle owner/permit-holder does not remain in arrears of either the welfare fund contribution or the vehicle tax both payable under the State enactments. These provisions are in no way in conflict with the law made by the Parliament (1988 Act). The State enactments do not create any new liability or obligation in relation to the permit issued under the 1988 Act (Central legislation), but it provides for dispensation to ensure timely collection of the welfare fund contribution as well as vehicle tax payable by the same vehicle owner/permit-holder", the judgment stated..The top court was hearing appeals challenging a 2007 judgment of the Kerala High Court, which had upheld the Constitutional validity of Sections 4(7), 4(8) and 15 of Motor Vehicles Taxation Act and Section 8A of the Kerala Motor Transport Workers' Welfare Fund Act. In the year 2005, the State of Kerala amended the 1976 Act and the 1985 Act thereby introducing sub-sections (7) and (8) of Section 4 in the 1976 Act and Section 8A in the 1985 Act. The effect of these amendments was to mandate production of receipt of remittance of welfare fund contribution at the time of making payment of vehicle tax before the taxation officer.The primary contention was that the State's laws had effectively bootstrapped the obligation to make contribution to the workers’ welfare fund with that of mandatorily paying tax towards using motor vehicles..The top court said that the legislative intent of the Kerala laws must be recognised as being a beneficial legislation towards compliance with welfare fund contributions to protect workers, specially those in the unorganised sector, engaged in commercial motor operations."Neither the provisions of the 1985 Act or the 1976 Act have the effect of interdicting the permit issued under the 1988 Act. The real intent and purpose behind these provisions is to restate the mandate stated in the 1988 Act that the vehicle cannot be used on road without a valid permit and payment of vehicle tax up to date," the Court said in its judgment.On the question of their repugnancy with respect to the Central legislation, the Court noted that the Motor Vehicles Act does not deal with levy of vehicle tax or its collection."If so, it is not possible to hold that there is direct conflict between the two provisions, namely, in the law made by the Parliament and by the State Legislature. Furthermore, on analysing the legislative intent and the efficacy of the impugned provisions enacted by the State Legislature concerning the manner of levy of vehicle tax and collection thereof, it will be amply clear that obedience to each of the laws (made by the Parliament and State Legislature) is possible without disobeying the other," the bench stated.Further, it stated that States have every right to levy cesses to be used for other purposes. "The liability of the vehicle owner/permit-holder to pay welfare fund contribution as well as to pay vehicle tax arises under the legislation enacted by the State Legislature. As such, there is nothing wrong in State Legislature making it compulsory to pay outstanding welfare fund contribution first before accepting the vehicle tax which had become due and payable," the bench explained. The bench also underscored that that the objective of the laws was to ensure that commercial vehicle owners do not remain in arrears of the welfare fund contribution or the vehicle taxes payable under State enactments."The State enactments do not create any new liability or obligation in relation to the permit issued under the 1988 Act (Central legislation), but it provides for dispensation to ensure timely collection of the welfare fund contribution as well as vehicle tax payable by the same vehicle owner/permit-holder," the judgment stated..[Read Judgment]