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Supreme Court Upholds Section 3A(3) of The HPMVT Act: Imposition of Additional Special Road Taxes is Not Punishment, But Regulatory

sahithi reddy ,
  17 January 2023       Share Bookmark

Court :
Brief :

Citation :
CA 5534-5594 of 2011


State of Himachal Pradesh vs Goel Bus Service Kullu


January 13, 2023


Justices Sanjay Kishan Kaul, Abhay S. Oka Vikram Nath 


Petitioner: State of Himachal Pradesh

Respondent: Goel Bus Service Kullu


The Himachal Pradesh Motor Vehicles Taxation Act, 1972's Section 3A(3), which allows for the imposition of an additional special road tax, was upheld by the Supreme Court as constitutionally valid.

The three-judge Apex Court panel overturned the Himachal Pradesh High Court's decision and noted that the levy imposed under Section 3A(3) is more of a regulatory measure than a fine.

According to the bench of Justices Sanjay Kishan Kaul, Abhay S. Oka, and Vikram Nath, the imposition of this additional special road tax was solely done to keep a check or to discipline the transport vehicle operators to operate their vehicles in conformity with the law.


Section 3A(3) HPMVT Act

The HPMVT Act's Section 3A addresses the collection of special road taxes. A further special road tax, in addition to the tax payable under subsection (1), must be levied, charged, and paid to the State Government on such vehicles at the rates as may be specified by the State Government, by notification, but not exceeding the rates specified in column (3) of Schedule-III of this Act, when a transport vehicle is operated without a valid permit or in any manner not authorized by the permit to be operated.


  • The respondent and several other public transportation providers who share a similar situation contested the constitutionality of Sections 3-A, 3-C, 4-A, and 5-A as well as Schedule-III under Section 3-A as introduced by the Himachal Pradesh Motor Vehicles Taxation (Amendment) Act, 19991. They also demanded that the notifications dated 18.12.1999, 23.12.1999, 31.12.1999, 06.01.2000, 12.02.2000, and 01.04.2000 be revoked and annulled In one of the petitions with C.W.P. No.32 of 2000, the relief was demanded (Goel Bus Service Vs. State of Himachal Pradesh and others)
  • The aforementioned clauses were included in the HPMVT(A) Act of 1999 as well as the HPMVT(A) Act of 2001, both of which sought to declare their validity as supra vires. Following the inclusion of the aforementioned clauses, the State of Himachal Pradesh published the aforementioned notifications, which were also contested in numerous writ cases. In its contested decision from July 6, 2007, the High Court affirmed the legality of all challenged sections except Section 3A (3), finding that none of them violated Part III or any other provision of the Indian Constitution.
  • It was decided that Section 3-A (3) did not fall under the purview of the State Legislature's legislative authority because, in essence, it levies a penalty and, as such, could not be considered a regulatory or compensatory tax. Additionally, it invalidated two notifications that were issued on January 6 and April 1 of 2000 because they did not follow the Constitution's overall design. A judgment made on January 1, 2000, based on discussions for a special toll tax was also overturned since it was determined that those discussions violated Act statutory provisions.


  • If the tax imposed by Section 3A(3) had the characteristics of a penalty and whether the State Legislature had the authority to enact such legislation?


  • Until the point when the infringing provision is unjust or illegal, the constitutional courts must refrain from meddling in questions of economic or tax law.
  • Compared to other laws about civil rights, legislation dealing with economic activity should be evaluated with more discretion and given more weight to the government.
  • As it would be compensating in nature, a lump sum tax might be imposed.
  • The State legislature's wisdom should be interpreted broadly, and just because a levy is paid in one lump sum or on a one-time basis does not render it void or unlawful. Such a levy may be made for administrative purposes, and the method and means of the collection cannot be used as the sole criterion for determining the type of levy.
  • The quashing of the notifications dated 06.01.2000 and 01.04.2000 was likewise illegal because courts have long recognized that a lump sum tax is to be imposed.
  • The tax levied by Section 3(A)3 of the 1972 Act is both compensating and regulatory. Due to the appellant-steep State's challenging terrain, a significant portion of the budget is allocated to the building, development, repair, upkeep, and maintenance of roads and bridges, which are essential to the survival of hilly terrains.
  • The rebuttal affidavit, which the State filed with the High Court and was also mentioned in the challenged ruling and lists special circumstances for the imposition and upholding of a compensation or regulatory tax as valid, was cited.
  • The High Court erred in declaring the provisions under Section 3-A(3) to be ultra vires and unconstitutional, even though it maintained the State legislature's authority to establish measures for the imposition of a special road tax under Sections 3-A(1)(2)(4).
  • The writ petitions are denied, the appeals are upheld, and the High Court's challenged decision is reversed.


  • The Motor Vehicles Act of 1988's Chapter XIII, specifically Section 192-A, addresses the crimes and punishments related to operating a vehicle without a permit.
  • Being a Central Act, Entry 35 of List III of the Seventh Schedule to the Constitution is relevant to the Motor Vehicles Act of 19882.
  • Section 192-A of the 1988 Act already specifies the fine for driving without a permit. The 1988 Act offers a comprehensive framework for motor vehicle legislation, including their infractions, repercussions, and fines. The aforementioned clause especially addresses using a transport vehicle without permission.
  • Entry 57 of List II of the Seventh Schedule of the Constitution is related to the Himachal Pradesh Motor Vehicle Taxation Act. The vehicle must meet two requirements to be used on roads, and any laws enacted by this article would also apply to laws made in y Entry 35 of List III. Any state legislation that interferes with or duplicates the 1988 Act's provisions would be unconstitutional to that degree.
  • The Supreme Court's ruling in State of West Bengal Vs. Kesoram Industries Ltd. & Others, (2004) 10 SCC 201, is relied upon.
  • The tax that Section 3A (3) seeks to impose is like a punishment, which is prohibited by the terms of the 1988 Act. The ruling that the extra tax sought to be imposed under Section 3A (3) is a penalty is not flawed in the assailed judgment. As a result, the appeals may be rejected.


  • The tax imposed by Section 3A(3), according to the Himachal Pradesh High Court, is like a fine, and the State Legislature is not authorized to enact such legislation. The High Court ruled that it constituted a fine because a special road tax was also assessed when a transport vehicle was operated without valid permission or in a way that was not permitted by the permit.
  • In a state-filed appeal, the Apex Court bench examined three issues: (1) whether Section 3A(3) is unfair or unconstitutional; (2) if it is a regulatory or compensation provision; and (3) whether there is any conflict with the Central Act's provisions. The court acknowledged the appeal and issued the following observations:
  • States have the authority to establish guidelines for how to tax vehicles.
  • The state legislatures have the authority to enact legislation governing the taxation of motor vehicles, as well as the transportation of people and commodities, and they also have the authority to establish general guidelines for the imposition of vehicle-related taxes. The statute passed by the Legislature of the State of Himachal Pradesh could not be faulted because no principles had been established by the Parliament. As a regulatory provision, the infringing clause falls under the purview of the Himachal Pradesh state legislature.
  • There is no evidence to suggest that the infringing provision is unfair or in violation of the Constitution.
  • This additional special road fee might be seen to be regulatory.
  • The only purpose of imposing this extra special road fee was to maintain control or discipline over transport vehicle operators so that they would operate their vehicles in compliance with the law. This might serve as a deterrent to transport companies, encouraging them to uphold the law and not break it. The implementation and strict observance of other statutory conditions would be regulated by this additional special road charge, which may be described as having a regulatory purpose.
  • No reprehensibility of any sort 
  • Entry 35 of List II granted the Parliament and State Legislatures the authority to enact legislation governing all types of mechanically propelled vehicles as well as to establish the guidelines for the imposition of taxes on such vehicles. The primary enactment, or the statute passed by the Parliament, does not specify any guidelines for the collection of taxes. In addition to having the authority to levy taxes under Entries 56 and 57 of List II, the State Legislatures also had the authority to establish rules under Entry 35 of List III. Therefore, in the absence of central legislation outlining the rules for tax collection, no repugnancy of any type could be charged, pleaded, or proven. In light of the aforementioned, it was impossible to establish any repugnancy or conflict between the state and federal laws.


The Supreme Court confirmed the constitutional validity of Section 3A(3) of the Himachal Pradesh Motor Vehicles Taxation Act, 1972, which permits the levy of an additional special road charge.

Click here to download the original copy of the judgement

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