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  • Section 5, Subsection 2 of the 1983 Income Tax Act
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The respondent had filed writ petitions before the Madras High Court challenging the location of the Kappalur Toll Plaza on National Highway 7 (NH 7). The High Court found that the plaza violated Rule 8 of the National Highways Fee (Determination of Rates and Collection) Rules, 2008 and directed the National Highways Authority of India (NHAI) to shift it closer to the junction where NH 7 and NH 208 bifurcate. It also restrained toll collection from vehicles using NH 7 solely to access NH 208 until relocation occurred. NHAI appealed these operative directions to the Supreme Court.

Legal Issues Presented

  1. Whether the existing location of the Kappalur Toll Plaza contravenes Rule 8(1) of the 2008 Rules and is not protected by the second proviso to that Rule.
  2. Whether requiring motorists who travel approximately seven kilometres on NH 7 merely to access NH 208 to pay the full toll is unjustified, thereby necessitating relocation of the toll plaza or other remedial measures.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Supreme Court disagreed with the High Court on both factual premises that underpinned its directions:

  • Compliance with the second proviso to Rule 8(1): The Court pointed to Paragraph 14 of NHAI’s counter-affidavit before the High Court, which expressly stated that the relevant stretch of NH 7 was “constructed only to give relief to traffic congestion in Thirumangalam Town.” This demonstrated that the highway section was intended primarily for the use of local residents, satisfying the condition of the second proviso and permitting a toll plaza within five kilometres of municipal limits.
  • Alleged unfair toll burden on limited users: Paragraphs 11 and 12 of an additional counter-affidavit showed the availability of monthly passes for local vehicle owners at concessional rates (Rs 200, later Rs 215) and exemptions for two-wheelers, three-wheelers, tractors, and vehicles carrying agricultural goods. Given these concessions, the Court found no basis for the High Court’s conclusion that limited users were being unjustly charged.

Because both foundational findings of the High Court were contradicted by material already on record, the Supreme Court considered the directive to relocate the toll plaza unwarranted. It deemed any further inquiry—such as the existence of an alternative road to NH 208—unnecessary in light of the concessions provided.

Holding and Implications

Appeal Allowed; High Court’s directions set aside.

Immediate Effect: The Kappalur Toll Plaza will remain at its current location, and NHAI may continue collecting tolls in accordance with existing Rules and concessions. The decision resolves the dispute between the parties but does not articulate new legal principles beyond interpreting the evidentiary sufficiency under Rule 8 of the 2008 Rules.

    Chairman, National Highways Authority Of India And Others v. R. Murali And Others

    Order

    1. Leave granted. The challenge in this appeal is against the following operative directions passed by the High Court 2014 SCC OnLine Mad 3422, (2014) 5 CTC 68 of Madras in the writ petition filed by Respondent 1: (R. Murali case 2014 SCC OnLine Mad 3422, (2014) 5 CTC 68, SCC OnLine Mad para 38)

    “38. … (iii) Writ Petitions (MD) Nos. 13906 and 14535 of 2012 are disposed 2014 SCC OnLine Mad 3422, (2014) 5 CTC 68 of directing the National Highways Authority of India to shift the Kappalur Toll Plaza, from its present location, to a place near the interjection where NH 7 and NH 208 bifurcate, so that there is no violation of the second proviso to Rule 8(1) or at least to ensure that persons who use a small section of NH 7 for the purpose of proceeding to NH 208 are not charged the same rate of toll fee as charged for those taking NH 7, and
    (iv) The National Highways Authority of India shall take a decision on the above lines within a period of four weeks from the date of receipt of a copy of this order. Until then the respondents shall not collect toll fee from the vehicles proceeding to NH 208. This can be done by opening a check post near the junction where NH 7 and NH 208 part and refunding at that check post, the money collected from vehicles taking NH 208. There will be no impediment for collecting toll fee from vehicles proceeding in NH 7 itself. No costs. Consequently, connected miscellaneous petitions are closed.”

    2. The High Court has issued the aforesaid directions on recording a finding that the toll plaza in question had been located contrary to the provisions of Rule 8 of the National Highways Fee (Determination of Rates and Collection) Rules, 2008 (for the sake of convenience, hereinafter referred to as “the said Rules”) and is not saved by the provisions contained in the second proviso to the said Rule. The second ground on which the High Court had thought it proper to issue the aforesaid directions is that the persons of the neighbourhood towns who use NH 7 for the purposes of accessing NH 208 are being made to pay toll despite the fact that they use only about 7 km of NH 7.

    3. Rule 8 of the said Rules may be conveniently extracted hereinbelow:

    “8. Location of toll plaza.—(1) The executing authority or the concessionaire, as the case may be, shall establish a toll plaza beyond a distance of ten kilometres from a municipal or local town area limits:
    Provided that the executing authority may, for reasons to be recorded in writing, locate or allow the concessionaire to locate a toll plaza within a distance of ten kilometres of such municipal or local town area limits, but in no case within five kilometres of such municipal or local town area limits:
    Provided further that where a section of the national highway, permanent bridge, bypass or tunnel, as the case may be, is constructed within the municipal or town area limits or within five kilometres from such limits, primarily for use of the residents of such municipal or town area, the toll plaza may be established within the municipal or town area limits or within a distance of five kilometres from such limits.
    (2) Any other toll plaza on the same section of national highway and in the same direction shall not be established within a distance of sixty kilometres:
    Provided that where the executing authority deems necessary, it may for reasons to be recorded in writing, establish or allow the concessionaire to establish another toll plaza within a distance of sixty kilometres:
    Provided further that a toll plaza may be established within a distance of sixty kilometres from another toll plaza if such toll plaza is for collection of fee for a permanent bridge, bypass or tunnel.”

    4. Under the second proviso to Rule 8(1), it is evident that a toll plaza may be established within the municipal or town area limits or within a distance of five kilometres from such limits provided the section concerned of the national highway is intended primarily for the use of the residents of such municipal or town area. In this regard, the High Court had recorded a finding that there was no averment in the counter-affidavit filed by the appellant National Highways Authority of India to show that the conditions stipulated by the second proviso did exist in the present case. Insofar as the payment of toll by the limited users of NH 7 is concerned, the High Court took the view that the obligation on such limited user to pay full toll is unjustified and needs to be remedied by the impugned directions to shift the toll gate to the location identified by the High Court.

    5. Having heard the learned counsel for the parties at some length and upon perusal of the relevant materials on record, we disagree with the High Court on both counts. In the counter-affidavit of Respondents 1 and 2 (appellants herein) filed before the High Court in Writ Petition (Civil) No. 13906 of 2012, there is a clear statement in Para 14 that the stretch concerned of NH 7 has been “constructed only to give relief to traffic congestion in Thirumangalam Town”. In the face of the aforesaid statement made in the counter-affidavit of the said respondents (appellants herein), the High Court could not have come to the finding that there is no statement on record to the effect that the particular stretch of the highway was not intended for the benefit of the residents of Thirumangalam and nearby places.

    6. Insofar as the limited use of NH 7 for people who really want to access NH 208 and the obligation to pay full toll is concerned, in the additional counter-affidavit filed by Respondents 1 and 2 (appellants herein) in Writ Petition (Civil) No. 13906 of 2012, there is a clear and unequivocal averment made in Paras 11 and 12 to the effect that monthly passes for local vehicles owners @ Rs 200 (enhanced to Rs 215) per month are available. There is a further statement that such exemptions have also been granted for owners of two-wheelers, three-wheelers, tractors and the vehicles carrying agricultural goods.

    7. In the light of the aforesaid concession available to the owners of the different kinds of motor vehicles living in the neighbourhood, we are at a loss to understand how the High Court could have felt justified to issue the impugned directions for shifting the toll plaza to the location identified in the order. Though the learned counsel for the appellants has made an additional argument that there is an alternative road available to access NH 208 without using NH 7, we do not consider it necessary to go into the said issue in view of the provision for concessional toll as mentioned by the appellants in the counter-affidavits filed before the High Court.

    8. In the light of the above, we are of the view that the impugned directions of the High Court 2014 SCC OnLine Mad 3422, (2014) 5 CTC 68 cannot be justified. We, therefore, set aside the same and allow the appeal.

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    Chairman, National Highways Authority Of India And Others v. R. Murali And Others
    (Apr 7, 2015)