A) Abstract / Headnote

This case pertains to the challenge by transporters and tour operators against the imposition of Border Tax/Authorization Fee by various State Governments, asserting violations of the All India Tourist Vehicles (Permit) Rules, 2023. Petitioners argued that such levies amounted to double taxation and were inconsistent with the legislative intent behind the Rules, 2023, which aimed to enable seamless inter-state transport. The Supreme Court declined to adjudicate the matter on its merits, emphasizing that the State-specific rules were not challenged directly. The Court dismissed the petitions, allowing petitioners the liberty to approach their respective High Courts for relief under Article 226 of the Constitution.

Keywords

• All India Tourist Vehicles (Permit) Rules, 2023
• Authorization Fee
• Border Tax
• Double Taxation
• Entries 56 & 57, List II, Schedule VII

B) Case Details

• i) Judgment Cause Title: Muthyala Sunil Kumar v. Union of India & Ors.
• ii) Case Number: Writ Petition (Civil) No. 864 of 2022
• iii) Judgment Date: 9th July 2024
• iv) Court: Supreme Court of India
• v) Quorum: Justice Vikram Nath and Justice Satish Chandra Sharma
• vi) Author: Justice Vikram Nath
• vii) Citation: [2024] 7 S.C.R. 634
• viii) Legal Provisions Involved:
  • All India Tourist Vehicles (Permit) Rules, 2023
  • Motor Vehicles Act, 1988
  • Entries 56 & 57 of List II, Schedule VII of the Constitution
  • Article 32 of the Constitution
• ix) Judgments Overruled by the Case: None
• x) Law Subjects: Constitutional Law, Taxation Law, Motor Vehicles Law

C) Introduction and Background of Judgment

The central issue arose from State Governments’ levying of Border Tax/Authorization Fee for vehicles carrying All India Tourist Permits, allegedly contravening the Permit Rules, 2023. These Rules, enacted by the Central Government, intended to harmonize inter-state tourist vehicle regulations, reduce barriers, and establish a revenue-sharing mechanism between the Centre and States. Petitioners challenged the constitutionality of such levies, citing double taxation and lack of legislative competence under the Constitution.

The Supreme Court, while acknowledging the grievances, emphasized procedural propriety and directed petitioners to first challenge the State enactments before the respective High Courts.

D) Facts of the Case

1. Petitioners included transporters and tour operators operating vehicles under All India Tourist Permits.
2. They alleged harassment at State borders due to repeated demands for Border Tax/Authorization Fee, despite adherence to the Permit Rules, 2023.
3. The Permit Rules, 2023 superseded earlier Rules, 2021, mandating uniform regulations and abolishing such fees to facilitate smooth travel.
4. Despite this, State Governments continued to impose fees, citing rules enacted under Entries 56 & 57 of List II, Schedule VII.
5. Interim relief was granted to petitioners restraining further tax collection, but the Supreme Court did not decide on the merits.

E) Legal Issues Raised

• i. Whether the Border Tax/Authorization Fee violated the All India Tourist Vehicles (Permit) Rules, 2023.
• ii. Whether such levies constituted double taxation.
• iii. Whether the State Governments had legislative competence under Entries 56 & 57 of List II, Schedule VII.
• iv. Whether petitioners should have approached High Courts under Article 226 instead of invoking Article 32.

F) Petitioner/Appellant’s Arguments

• The Border Tax/Authorization Fee violates the Permit Rules, 2023, which explicitly abolished such levies for vehicles holding All India Tourist Permits.
• State Governments’ impositions amount to double taxation, as petitioners already paid the requisite fees to the Centre.
• The fees lack legislative authority, as inter-state transport is regulated under Entry 35 of List II, subject to Central legislation.
• Petitioners invoked Article 32, citing violation of fundamental rights due to harassment and financial burden imposed by repeated levies.

G) Respondent’s Arguments

• States contended their rules were framed under Entries 56 & 57 of List II, granting them competence to regulate taxation on vehicles entering their territories.
• Petitioners should have approached the respective High Courts under Article 226, challenging specific State enactments.
• They argued that the Rules, 2023, while abolishing central authorization fees, did not prohibit States from imposing their taxes under separate legislation.

H) Judgment

a. Ratio Decidendi

1. The Supreme Court observed that the State-specific rules imposing taxes were not challenged directly.
2. Petitioners should exhaust remedies by approaching jurisdictional High Courts under Article 226.
3. The Court refrained from examining merits, emphasizing procedural propriety and jurisdictional hierarchy.

b. Obiter Dicta

• Petitioners must challenge the State provisions to establish inconsistency with the Permit Rules, 2023 or constitutional provisions.

c. Guidelines

• Petitioners are granted liberty to approach High Courts for relief.
• Tax already recovered by States remains subject to the final outcomes of High Court proceedings.
• Petitioners must undertake to reimburse demands if interim orders result in adverse final rulings.

I) Conclusion & Comments

The judgment underscores the importance of jurisdictional discipline and procedural hierarchy in constitutional litigation. It reflects the balance between legislative federalism and judicial restraint in disputes involving inter-state coordination. The verdict directs focus on the primary question of legislative competence and urges comprehensive challenges before appropriate forums.

J) References

1. All India Tourist Vehicles (Permit) Rules, 2023.
2. Motor Vehicles Act, 1988.
3. Entries 35, 56 & 57 of List II, Schedule VII of the Constitution.
4. State of Tamil Nadu v. M/S Adhiyaman Educational Research Institute (1995) 4 SCC 104 – on legislative competence under the Seventh Schedule.
5. Sanjay Kumar Sinha v. State of Bihar (2004) 10 SCC 734 – jurisdiction under Article 32 versus Article 226.