ption that the profits would be diminished or greatly reduced  it could not be held that there was any infringement of article 191g
57 A D iii Under Act XVI of 1952 as amended by Act X of 1958 the Government could grant exemption from payment of tax by means of a notification in respect of any motor vehicle running in a particular area and such an exemption was given to the operators in the Telengana region 53 for the reason that before the extension of the Act XVI of 1952 to this area no tax similar to the one levied under that Act was payable in that area and that this exemption was granted under a different enactment
Therefore the challenge Under article 14 could not succeed
58 A C No question of discrimination arose when taxes were being imposed under two different sets of laws in different States or geographical areas The laws in Madras and Andhra Pradesh were different and persons having primary permits from Madras were naturally governed by the laws operating in that State
58  CIVIL APPELLATE JURISDICTION Civil Appeals Nos 69 112 and 113 of 1968
Appeal from the judgment and order dated October 25 1962 of the Andhra Pradesh High Court in Writ Petitions Nos
1307 1305 and 1353 of 1961
K Srinivasamurthy and Naunit Lal for the appellants in all the appeals
P Ram Reddy and P Parmeshwara Rao for the respondent No 1 in all the appeals
The Judgment of the Court was delivered by Grover J
These appeals by certificate from a judgment of the Andhra Pradesh High Court which disposed of several petitions under article 226 of the Constitution including the petitions filed by the appellants involve the question of the constitutionality of the Andhra Pradesh Motor Vehicles Taxation of Passengers and Goods Amendment and Validation Act 1961 Andhra Pradesh Act XXXIV of 19 61
The appellants hold permits either for stage carriage or for public
carriers issued under the 
They ply these vehicles on different routes in the State as also on some of the inter State routes
They were subject to tax levied under the Madras Motor Vehicle Taxation Act 1931
1952 the Madras Motor Vehicles Taxation of Passengers and Goods Act 1952 Act XVI of 1952 was enacted by which every operator had to pay Rs 1250 per seat per quarter or 37 naye paise per seat per mile over and above the tax payable under the Madras Motor Vehicles Taxation Act 1931
Under that Act the operators were paying tax of Rs 30 per seat per quarter
The validity of Act 16 of 1952 was challenged before the Madras High Court
In Mathurai Pillai vs The State of Madras1 its validity was upheld except as to
the proviso to section 3 of the Act
After the formation of Andhra Pradesh State the Governor promulgated an Ordinance amending Madras Act 16 of 1952 in the light of the 1 1954 IMLJ 110
54 above judgment
The provisions contained in the Ordinance were subsequently reenacted as President s Act 11 of 1954
The operators therefore paid taxes imposed under Act 16 of 1952 as amended in the State of Andhra Pradesh
By means of Act 21 of 1959 the legislature of Andhra Pradesh amended Act 16 of 1952
Section 3 of Act 16 of 1952 as amended read as follows In cl
a of sub rule i of rule 1 in the schedule to the Principal Act for the words 37 np
per seat per year per mile the words Rs 148 np
per seat per year per mile and for the words Rs 1250 np
per seat per quarter the word Rs 50 per seat per quarter shall be substituted and cl
b of the said Sub rule for the words Rs 2250 np
per month the words Rs 45 per month shall be substituted The validity of the Amending Act 21 of 1959 was challenged by means of writ petitions before the High Court
A Division Bench
struck down the impugned provisions as unconstitutional and ultra vires on the ground that since that Act imposed a restriction on the operators  freedom of trade and commerce under article 301 of the Constitution the previous sanction of the President was necessary under the proviso to article 304b and because that had not been obtained the Act was legally inoperative Venson Transport vs The State of Andhra Pradesh1
Subsequently Act 34 of 1961 was enacted after the sanction of the President was obtained to the Bill under the proviso to article 304b
It validated two acts namely Act 21 of 1959 and Act 22 of 1959 and also amended Act 16 of 1952 and substituted sub section
3 of section 3 of that Act by a new sub section
It further validated the realisation of the tax paid or payable and the fee paid or payable and other action taken under Act 21 of 1959 and Act 22 of 1959
It empowered the Government to levy additional tax at the rate of Rs 50 per seat per quarter from May 8 1959 to January 16 1961
Thereafter from January 17 1961 to November 3 1961 the rate was fixed at Rs 1250 per seat per quarter
After the commencement of the Validating Act 34 of 1961 the rate was to be Rs 3750 per seat per quarter
This was to be operative till April 1 1962 when the Act would cease to have any effect
The validity and constitutionality of Validating Act 34 of 1961 were challenged by means of various petitions under article 226 of the Constitution
It was sought to be contended before the High Court that the impugned legislation was not regulatory in character
The sole object was to augment the revenues of the State
This brought the statute within the mischief of article 1 1961 I An
WR 351
55 301 of the Constitution
The High Court was of the view that the question whether the statute was regulatory or compensatory was relevant in the context of Part XIII of the Constitution only in the event of non compliance with the proviso to article 304b of the Constitution
As the previous sanction of the President had been obtained in terms of the proviso such points could no longer be canvassed
The challenge on the ground of article 14 before the High Court also failed
An argument was addressed that the impugned Act was repugnant to article 191g of the Constitution
The reasonableness of the restriction within the meaning of article 304b also came up for consideration
The High Court in the light of the facts and figures placed before it held that the increase in surcharge of the fares and freights contemplated by the impugned Act did not constitute an impediment to the trade of the transporters and that the restriction in the shape of additional imposts was not unreasonable
It is unnecessary to refer to the other points agitated before and decided by the High Court
Counsel for the appellant has urged the following points before us 1 The impugned Act imposed a tax for augmenting the revenues of the State
It was neither regulatory nor compensatory in nature and it fell directly within the mischief of article 301 of the Constitution
2 Even though there had been compliance with the proviso to article 304b in the matter of obtaining the requisite sanction it was open to the court to go into the question of reasonableness both with reference to the aforesaid provision and article 191g read with clause 6 of that Article
The court was equally entitled to determine whether the imposition was in the public interest
3 The impugned Act violated article 14 of the Constitution and was discriminatory inasmuch as a it had not been made applicable to the Telengana area although it was applicable to the Andhra area and b the vehicles on inter State routes on permits granted by other States had not been subjected to tax
In order to decide these points the principles which have been settled by this Court with regard to article 301 and article 304b may be noticed
According to the majority view in Automobile Transport Rajasthan Ltd vs The State of Rajasthan  Others1 if a tax is compensatory in character it cannot be said to fall within the mischief of article 301
Subba Rao J as he then was 1 1963 1 SCR 491
56 who concurred in the majority decision but delivered a separate judgment preferred to rest his view on the regulatory nature of such taxing statute as would escape the mischief of article 301
In Khyerbari Tea Co Ltd  Anr
vs The State of Assam1 the difference between the view expressed in the Automobile Transport Rajasthan case2 and an earlier decision in Atiabari Tea Co Ltd vs The State of Assam  Others3 with regard to the scope and effect of the provisions of article 304b was noticed 
It was observed that according to the majority view expressed in Atiabari Tea Co case3 if the Act is passed under article 304b and its validity is impeached the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in public interest and in doing so it may rely on the fact that the taxes levied by the impugned Act are compensatory in character
On the other hand according to the majority decision in the Automobile Transport Rajasthan2 case compensatory taxation would be outside article 301 and cannot fall under article 304b
since it was not urged that the tax was of a compensatory nature in Khyerbari Tea Co Ltd1 case this Court proceeded to examine whether the restrictions imposed by the statute impugned in that case were reasonable and in public interest within the meaning of article 304b
The effect of compliance with the provisions of the proviso to article 304b by obtaining the previous sanction of the President to the Bill was also considered and it has been laid down that notwithstanding the sanction the question of the restrictions
being reasonable and in public interest is open to examination by the court
The Act can be held to
be valid only if it is shown that the restrictions imposed by it are reasonable and in public interest
It has not been contended on behalf of the State that the impugned Validating Act imposes a tax which is by way of a regulatory or compensatory measure
It has therefore to be seen whether the restrictions imposed are reasonable and in public interest within the meaning of article 304b
Before the High Court an attempt was made on behalf of the appellants to show that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated
According to some of the affidavits filed on behalf of the writ petitioners profits derived in recent years did not exceed an average of Rs 2000 per stage carriage even without the additional burden which had been imposed and the transporters would suffer heavy losses if the tax as increased by the impugned legislation were to be realized
The High Court referred to the computation of the income by the Income tax department of some 1 1964 5 SCR975
2 3  57 of the transporters in whose assessments the income in regard to each bus had been calculated at a figure of Rs 7000 annually which showed that the profits were much higher than Rs 2000 
It was not disputed before the High Court that the transporters had been permitted to enhance the fares
If the fares could be enhanced it was obvious that the burden would not fail on the transporters
It was urged that owing to competition from the railways and from operators whose vehicles had been registered in the Madras State and who could charge lower rates the appellants were not in a position to collect extra fares which they had been permitted to do
This argument also cannot hold and was rightly repelled by the High Court on the ground that if the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restriction
Apart from a faint attempt to repeat some of the arguments which were addressed before the High Court on this point nothing new has been brought to our notice which would justify the view that the tax which has been imposed exceeds the limits of permissible reasonableness
As regards public interest we are unable to find nor has any attempt been made to satisfy us that the provisions of the impugned Validating Act with regard to imposition of tax are not in public interest
This is sufficient to dispose of the challenge under article 191g as well
We may in this connection refer briefly to the conclusion of the High Court which was reached on a consideration of the affidavits filed before it
It has been found that there is no material which would warrant the conclusion that the increase in the surcharge of the fares and freight contemplated by the impugned Validating Act would constitute an impediment to the trade
The utmost that could be said was that it would result in the diminution of profits
Even on the assumption that the profits would be diminished or greatly reduced it cannot be held that there is any infringement of article 191g
Coming to the attack on the ground of violation of article reference may be made to the background relating to taxation of passengers and goods carried in motor vehicles in the State prior to the formation of Andhra Pradesh
It appears that there was no law in the erstwhile Hyderabad State imposing any tax on passengers and goods
After the merger of Telengana and Andhra areas the laws in operation in the Telengana region continued to remain in force by virtue of the provisions of section 119 of the States Reorganization Act 1956
By Act X of 1958 the State of Andhra Pradesh amended Act XVI of 1952 inter alia extending that to the Telengana area
This Act Act X of 1958 also amended the Principal Act by adding section 19 according to which the 1 sup
CI70 5 Government could grant an exemption by means of a notification in respect of any motor vehicle running in a particular area
On November 4 1961 a notification was issued exempting passengers luggage and goods carried in stage carriages from payment of tax under the aforesaid Act within the Telengana area
There can be no manner of doubt that this exemption was given to the operators in the Telengana region for the reason that before the extension of the parent Act to this area no tax similar to the one levied under the parent Act was payable in that area and that this exemption was granted under a different enactment
It is apparent that for these reasons the challenge under article 14 cannot succeed
The same is the position with regard to the tax payable by the appellants and that which the transporters having permits for inter State routes have to pay
As has been pointed out in the affidavits filed on behalf of the State the laws in the two States Madras and Andhra Pradesh are different and persons having primary permits from Madras are naturally governed by the laws operating in that State
No question of discrimination can arise when taxes are being imposed under two different sets of laws in different States or geographical areas
The appeals therefore fail and are dismissed with costs
One hearing fee
RKPS Appeals dismissed


Summary:
The appellants motor transport operators challenged the increase in surcharge of the fares and freights imposed by the Andhra Pradesh Motor Vehicles Taxation of Passengers and Goods Amendment and Validation Act 1961
They urged i the Act was neither regulatory nor compensatory in nature and it fell directly within the mischief of article 301 of the Constitution ii the imposts exceeded the limits of permissible reasonableness were not in the public interest and therefore violated articles 304b and 191g and iii the Act violated article 14 a inasmuch as it had not been made applicable to the Telegana area although it was applicable to the Andhra area and b the vehicles on inter State routes on permits granted by other States had not been subjected to tax
HELD i It was not the contention of the State that the impugned Act imposed a tax by way of a regulatory or compensatory measure
Therefore it had to be been whether the restrictions imposed were reasonable and in the public interest within the meaning of article 304b these questions were open to examination by the court notwithstanding the fact that the sanction of the President was obtained in compliance with the Article
55 E F Mathurai Pillay vs State of Madras  Automobile Transport Rajasthan Ltd vs State of Rajasthan vs State of Assam  and Atiabari Tea Co Ltd vs State of Assam   referred to
ii There was no material which would justify the view that the tax which had been imposed exceeded the limit of permissible reasonableness or was not in the public interest
The argument that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated had no substance
The operators had been permitted to enhance the freights and if the freights could be enhanced obviously the burden would not fall on them
If the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restrictions
This disposed of the challenge under article