82 of 1959
Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights
519 section K Kapur Jai Gopal Chagnani K K Jain and B P Maheshwari for the petitioners
C K Daphtary Solicitor General of India G C Kasliwal Advocate General Rajasthan and D Gupta  for the respondent
March 22
The Judgment of the Court was delivered by HIDAYATULLAH J
This is a petition under article 32 of the Constitution
The petitioners who are seven in number challenge as unconstitutional and ultra vires certain provisions of the Rajasthan Passengers and Goods Taxation Act 1959 the Rajasthan Passengers and Goods Taxation Rules 1959 and a notification issued under R 8
For brevity we will refer to them in this judgment as the Act the Rules and the notification respectively
The first petitioner is a registered firm petitioners Nos 2 to 6 are the partners of that firm and petitioner No 7 is the General Manager of the firm
Petitioner No 7 holds a public carrier permit for the whole of Rajasthan in his individual name
The petitioners also hold 59 stage carriage permits from the Regional Transport Authority Jodhpur for diverse routes over roads which have different kinds of surfaces some being sandy or katcha and others metalled tarred etc
The Act was passed in 1959 for levying a tax on passengers and goods carried by road in motor vehicles
The power to enact the Act purports to be derived from Entry No 56 of the State List in Sch
VII to the Constitution which reads 156
Taxes on goods and passengers carried by road or on inland waterways
 The Act received the assent of the President on April 27 1959 and was published in the Rajasthan Gazette on April 30 1959
The same day the Rules framed in exercise of the powers conferred by section 21 of the Act were also published and the notification was also issued
The Rules were subsequently amended and we are concerned with the Rules as amended
Before we deal with the case further it is convenient to see how the Act is constructed and what the 520 Rules and the notification provide
The Act which consists of 21 sections came into force in the whole of the State of Rajasthan on May 1 1959
The Act contains the usual provisions to be found in all taxing statutes about appeals revision offences and penalties power to compound offences recovery of tax as arrears of land revenue bar of proceedings exclusion of the jurisdiction of Civil Courts refunds and power to make rules to which detailed reference need not be made  We are only concerned with the imposition of the tax and the mode of its recovery and will refer to those provisions which are relevant
Section 3 is the charging section and section 4 deals with the method of collection of the tax
Since these sections are the main subject of attack we quote them in full 3
Levy of tax 1 There  shall be levied charged and paid to the State Government a tax on all fares and freights in respect of all passengers carried and goods transported by motor vehicles at such rate not exceeding one eighth of the value of the fare or freight in the case of cemented tarred asphalted metalled gravel and kankar roads and not exceeding one twelfth of such value in other cases as may be notified by the State Government from time to time subject to a minimum of one naya paisa in any one case the amount of tax being calculated to the nearest nays paisa
Explanation
When passengers are carried and goods are transported by a motor vehicle and no fare or freight has been charged the tax shall be levied and paid as if such passengers were carried or goods transported at the normal rate prevalent on the route
2 Where any fare or freight charged is a lump sum paid by a person on account of a season ticket or as subscription or contribution for any privilege right or facility which is combined
with the right of such person being carried or his goods transported by a motor vehicle without any further payment or at a reduced charge the tax shall be levied on the amount of such lump sum or on such amount as appears to the prescribed authority to be fair and 521 equitable having regard to the fare or freight fixed by a competent authority under the Motor Vehicles Act 1939Central Act 4 of 1939
3 Where passengers are carried or goods transported by a motor vehicle from any place outside the State to any place within the State or from any place within the State to any place outside the State the tax shall be payable in respect of the distance covered within the State at the rate laid down in sub section 1 and shall be calculated on such amount as distance covered in the State bears to the total distance of the journey Provided that where passengers are carried or goods transported by a motor vehicle from any place within the State to any other place within the State through the intervening territory of another State the tax shall be levied on the full amount of the fare or freight payable for the entire journey and the owner shall issue a single ticket or receipt as the case may be accordingly
4 Method of collection of tax
The tax shall be collected by the owner of the motor vehicle and paid to the State Government in the prescribed manner Provided that in case of public carriers the State Government may accept a lump sum in lieu of the tax chargeable on freight in the manner prescribed Provided further that in case of contract carriages the State Government may accept a lump sum in lieu of the tax chargeable on fare in the manner prescribed
 Section 5 lays down the method of levy and enjoins the issuance of a ticket showing the tax paid of a receipt showing the freight charged and the tax paid
It includes a proviso that in the case of passengers the tax becomes chargeable only on entry in the State if the journey began outside the State
Section 6 requires the owner to keep accounts and to submit periodic returns and provides for levy of penal ties in case of failure which penalties are laid down in section 8
Section 7 deals with the appointment of taxing authorities and a 12 gives the power of entry the 522 officers into vehicles garages and offices for inspection and checking
Section 10 enjoins upon the owners the duty of furnishing tables of fares and freights time tables etc
Section 9 enables the State Government to grant to any person or class of persons
exemption from all or any of the provisions of the Act
The Rules prescribe those matters which are required under the Act to be prescribed by the Rules
It is not necessary to refer to them beyond Rules 8 and 8 A which have been challenged
Rule 8i prescribes the method of payment of tax by means of stamps to be affixed to the tickets and the second proviso is to the following effect Provided further that the tax payable under the Act on fare by the owner of a motor cycle rickshaw or a motor cab shall be paid to the State Government in lump sum of which the amount shall be fixed by the State Government from time to time by Notification in this behalf Rule 8ii then provides The owner of a public carrier shall pay to the State Government a lump sum in lieu of the tax chargeable under the Act on freight and the amount of such lump sum shall be fixed by the State Government from time to time by Notification in this behalf
 Rule 8 A in so far as material to this case reads Provisions for payment of lump sum in lieu of tax on fare or freight1 In cases covered by the second
proviso to sub rule 1 of rule 8 and by subrule ii of that rule the lump sum fixed by the State Government as payable in lieu of the tax on fare or freight as the case may be shall be deposited in cash into a Government Treasury or a Sub Treasury in equal quarterly instalments payable within 15 days from the 31st day of March the 30th day of June the 30th day of September and the 31st day of December every year and in case of such vehicles not registered in Rajasthan to the incharge of the check post or barrier at the time of their entry into the State of Rajasthan or to the officer of the Excise and Taxation Department nearest to the point of 523 entry into the State and having jurisdiction over that area Provided that Provided that a for the quarter ending on the 30th day of June  1959 such payment shall be made for the months of May and June 1959 at the rate of 112 of the said sum for each month b where the owner has not plied his vehicle for the entire quarter immediately preceding any of the aforesaid dates a proportionate decrease in the amount due for that quarter may be made c if the owner ceases to ply his vehicle on a date preceding any of the aforesaid dates the proportionate amount for the quarter shall be paid by him immediately upon such cessation and d where the owner has not plied his vehicle for a continuous period of not less than three months and produces a certificate from the authority competent under the Rajasthan Motor Vehicles Taxation Act 1951 or the rules made thereunder to the effect that he has been refunded the tax for that period under section 7 of the said Act no amount by way of tax under the Act shall be payable for such period
2 The owner shall inform the Assessing Authority as soon as his vehicle goes out of use
When the vehicle is again put on the road an intimation to that effect shall be sent to the Assessing Authority immediately
 The notification which was issued under R 8 prescribing lump sum rates is as follows Jaipur April 30 1959 No F 155 E  T59
In pursuance of rule 8 of the Rajasthan Passengers and Goods Taxation Rules 1959 the Government of Rajasthan hereby directs that the tax chargeable on fare or freight in respect of the following cl
was of Motor Vehicles shall be paid in lump sum of which the amount is mentioned opposite each such class 3
Public carriers Goods Vehicles a Holding a general permit under the  to use all roads in Rajasthan 524 i Load carrying capacity below 5 Tons Rs 420 per annum
ii Load carrying capacity 5 Tons and above 
Rs 540 per annum
b Holding a permit under the  for plying within the limits of any region or on fixed routes in any one region iLoad carrying capacity below 5 Tons 
Rs 360 per annum
ii Load carrying capacity 5 Tons and above Rs 480 per annum
4 Public Carriers Goods Vehicles plying on hire on temporary permits under the  b Public Carriers Goods Vehicles di Load carrying capacity below 5 Tons 
Rs 2 for each calendar day ii Load carrying capacity 5 Tons and above
Rs 4 for each calendar day This shall have effect on and from the 1st May 1959 The petitioners challenged the Act the Rules and the notification from many angles in the petition but at the hearing before us the arguments were more restrained
The main objection to the Act is that the tax has not been laid upon passengers and goods as authorised by Entry No 56 but upon fares and freights which are different entities and in support of the contention that there is a difference reference is made to Entry No 89 of the Union List where power is conferred to tax fares and freights
It is submitted that a tax on fares and freights being a different tax cannot be levied under the Entry and thus the tax is without authority of law
The Act and the Rules are further challenged on the grounds that they are repugnant to articles 301 and 304 as being a restriction upon inter State trade commerce and intercourse to article 19 as involving an unreasonable restriction upon the business of the petitioners and also to article 14 as discriminating between this mode of transport and the Railways
The Act is further challenged on the ground that it concedes to the State 525 Government the power to fix the amount of lump sum payment without guidance
The rates and lump sum payment are challenged because they involve discrimination between routes involving roads of different surfaces
Rules 8 and 8 A and the notification are challenged as it is submitted they go beyond the Act by making the lump sum payment compulsory even though under the Act it is optional and involve payment of tax even when no passengers or goods are transported
Lastly it is said that by making tax payable even though the route between two intra State point passes outside the State the Act has an extra territorial operation which is ultra vires the legislature
The first and the Main contention is that the Act in the guise of taxing passengers and goods taxes really the income of the petitioners or at any rate fares and freights and is thus unconstitutional
It is argued that the tax is borne by the operators because of competition with the Railways
That the petitioners are required to bear the tax themselves to stand competition with the Railways is a matter of policy  which the petitioners follow and is not something which flows inevitably from the provisions of the Act
We do not agree that the Act in its pith and substance lays the tax upon income and not upon passengers and goods
Section 3 in terms speaks of the charge of the tax in respect of all passengers carried and goods transported by motor vehicles and though the measure of the tax is furnished by the amount of fare and freight charged
it does not cease to be a tax on passengers and goods
The Explanation to section 31 lays down that even if passengers are carried or goods transported without the charge of fare or freight the  tax has to be paid as if fare or freight has been charged
This clearly shows that the incidence of the tax is upon passengers and goods though the amount of the
tax is measured by the fares and freights
A similar argument was not accepted by the Madras High Court in Mathurai vs State of Madras 1 and the same view was expressed in Atma Ram Budhia vs State of Bihar 2
In our opinion the charging section does 1 ILR 2 1952 ILR 31 Pat 493 SB
526 not go outside Entry No 56
The tax is still on passengers and goods though what it is to be is determined by the amount of fare or freight
It is clear that if the tax were laid on passengers irrespective of the distance travelled by them it would lead to anomalies if the amount charged be the same in every case
This if additionally clear in the case of goods where the weight bulk or nature of the goods may be different and a scale of payments must inevitably be devised
Though the tax is laid on passengers and goods the amount varies in the case of passengers according to the distance travelled and in the case of goods because the freight must necessarily differ on account of weight bulk and nature of the goods transported
The tax however is still a tax on passengers and goods and the argument that it is not so is not sound
We are also of opinion that no inter State trade commerce or intercourse is affected
The tax is for purposes of State and falls upon passengers and goods carried by motor vehicles within the State
No doubt it falls upon passengers and goods proceeding to or from an extra State point but it is limited only to the fare and freight proportionate to the route within the State
For this purpose there is an elaborate scheme in R 8 A to avoid a charge of tax on that portion of the route which lies outside the State
There is thus no tax on fares and freights attributable to routes outside the State except in one instance which is contemplated by the proviso to sub a
3 of section 3 and to which reference will be made separately
In our opinion the levy of tax cannot be said to offend articles 301 and 304 of the Constitution
The next contention is that the Act allows an option to pay a lump sum in lieu of the tax but Rules 8 and 8 A and the notification make the payment of the lump sum compulsory
There is no doubt that ex facie the two provisos to a 4 employ language which is permissive while the two Rules and the notification employ language which is imperative
The two provisos to a 4 are enabling and thereby authorise the State Government to accept a lump sum payment in lieu of the tax actually chargeable
The 527 word accept shows that the election to pay a lump sum is with the taxpayer who may choose one method of payment or the other
The inclusion of such a provision is designed to promote easy observance of the Act and also its easy enforcement
The charge of tax calculated on fares and freights involves difficulties for the operators who have to keep accounts and also difficulties for the taxing authorities who have to maintain constant checks and inspections
The lump sum payment is a convenient mode by which an amount is payable per year irrespective of whether the tax would be more or less if calculated on actual fares or freights
The operators pay the lump sum if they so choose to avoid having to maintain accounts and to file returns and the Government accepts it to avoid having to inspect accounts and to keep a check
The rates which are prescribed for a lump sum payment per year are for those who wish to avail of them
It is however contended that though the section creates an option the Rules and the notification make the payment compulsory and attention is drawn to the word shall used both in Rules 8 and 8 A and the notification whereas the words in the two provisos to section 4 are may accept
The word shall is ordinarily mandatory but it is sometimes not so interpreted if the context or the intention otherwise demands
In re Lord Thurlow Ex Parte Official Receiver 1 Lord Esher M R observed at p 729 that the word shall  is not always obligatory
It may be directory and Lopes L J at p 731 added It is clear that the word shall  is not always used in a mandatory sense
There is abundance of authority to the contrary in cases where it has been held to be directory only
It was thus that the word shall  was held to be directory only in that case by Coutts Trotter C J in Manikkam Pattar vs Nanchappa Chettiar 2 by Russel J in In re Rustom 3 by Venkatasubba Rao J 1 1895 1 QB 724 2 3 Bom
396 528 in Jethaji Peraji Firm vs Krishnayya 1 and by the Judicial Committee in Burjore and Bhavani Pershad V Mussumat Bhagana 2
Now Rules 8 and 8 A and the notification only lay down what lump sum payment has to be in each case if a lump sum is being paid
The mandatory language is used to fix peremptorily the amount of the lump sum
Rules 8 and 8 A and the notification cannot be said to overreach the section to which they are subordinate and from which they must take their colour and meaning
If the Act creates an option it cannot be negatived by the Rules
The Act and the Rules must be read harmoniously and reading them so it is plain that the apparent mandatory language of the Rules and the notification still retains the permissive character of the section but only lays down what the amount of the lump sum must be if lump sum payment is made in lieu of payment of the tax calculated on actual fares and freights
If the two Rules and the notification are read in this way the mandatory language is limited to the prescribing of the lump sum rates
In our opinion the two Rules and the notification are not void and contradictory of the Act
It is contended that the power to fix lump sums in lieu of tax has been conferred upon Government without guidance and is therefore unconstitutional
It is also urged that the levy of a lump sum leads to the result that even if passengers or goods are not transported the tax is still payable
These arguments in our opinion cannot be accepted
The learned Advocate General pointed out that the lump sum rates work out at a very low figure the minimum being less than Re 1 per day and the maximum Rs 150 nP per day
The rates are no doubt very reasonable but this hardly meets the argument of the petitioners
There are however good reasons for upholding the fixation of lump sums
The payment of the lump sum is not obligatory and a person can elect to pay tax calculated on actual fares and freights
1 1929 ILR  656
2 1883 LR 11 I A 7
529 The fares and freights are fixed by competent authority under the  and that takes into account the average earnings and the lump sum is fixed as an average of what tax would be realised if calculated on actual fares and freights
There is no compulsion for any operator to elect to pay a lump sum if he does not choose to do so
Nor is the argument that there may be
vacant periods when no passengers or goods are transported but the tax is payable is of any force because there may be days when the business done might result in tax in excess of the lump sum payable
The lump sum figure is based on averages and cannot be impeached by reference to a possibility that on some days no business might be done
The next contention that there is discrimination between road transport and rail transport is also without force
The entry in the State List is limited to a tax on passengers and goods transported by road or inland waterways
 The comparison with Railways is not admissible because tax on railway fares and freights is a Union subject and is not available to the State Legislature
There is thus a clear classification made by the Constitution itself
No discrimination between operators of public motor vehicles using roads has been pointed out and all operators are equally affected by the Act
Some manner of support for the argument was sought from section 9 where the State Government is empowered to grant exemption from the Act by general or specific order to any person or class of persons
But we were informed that no exemption has been granted except to hospitals or charities
It is next urged that the imposition of a higher rate of tax for cemented tarred asphalted metalled gravel and kankar roads than that for other roads discriminates between operator This argument overlooks the very object and purpose of a tax
As is well known taxes are burdens or charges imposed by legislative power upon persons or property to raise money for public purposes
The power to tax is thus 67 530 indispensable to any good government and the imposition of the tax is justified on the assumption of a return in the shape of conveniences
If this be the true import of a tax it is but natural that taxes will be graded according as they involve more or less of such conveniences
They will be heavy in case of roads requiring greater expenditure to construct and to maintain than in case of roads not requiring such expenditure
All operators using the better kind of roads have to pay the heavier tax and there is no discrimination between them as a class
Discrimination can only be found if it exists between persons who are comparable and there is no comparison between persons using the better kind of roads and those who use roads which are not so good
It is the cost of construction and maintenance which makes the difference in the tax and no case of discrimination can be said to be made out
The last contention is that the proviso to sub section
3 of section 3 is extra territorial in nature because it makes the tax payable on fares and freights attributable to the territory of another State when the route passes through such territory even though the journey starts and ends in Rajasthan
We were informed that now there are no such routes but even otherwise such portions must have been very short and negligible
No affidavit was sworn to show how many such routes were involved and what their extent was and in view of lack of adequate averments we must reject the contention
In the result the petition fails and is dismissed with costs
Petition dismissed


Summary:
The petitioners who were partners of a registered firm hold ing public carrier and stage carriage permits challenged the constutionality of certain provisions of the Rajasthan Passengers and Goods Taxation Act 1959 the Rajasthan Passengers and Goods Taxation Rules 959 and a notification issued under r 8
The Act was passed for levying a tax on passengers and goods 518 carried by road in motor vehicles the power to enact being derived from Entry 56 of the State List in Sch
VII of the Constitution
Section 34 of the Act prescribed the method of collection of the tax and provided that the State Government may accept a lump sum in lieu of the tax chargeable
Rule 8i prescribed the method of payment and provided that the tax shall be paid in lump sum and the notification in question prescribed the rates of the tax
Held that the incidence of the tax was upon passengers and goods and not upon income of the petitioners though the amount of the tax was measured by the fares and freights
The charging section namely section 3 did not go outside Entry 56
Mathurai vs State of Madras ILR  Alma Ram Budhia vs State of Bihar Pat 493 referred to
The tax did not offend articles 301 and 304 of the Constitution and no inter State trade commerce or intercourse was affected by it
Although the tax fell upon passengers and goods proceeding to or from an extra State point it was limited only to the fare and freight proportionate to the route within the State
The word shall is ordinarily mandatory but it is sometimes interpreted as directory and in the present case the word shall used in rr 8 and 8A and the notification should be interpreted as directory as section 4 of the Act from which the Rules and the notification derive their authority creates an option by using the words may accept
The Act the Rules and the notification must be read harmoniously
The mandatory language was used to fix peremptorily the amount of the lump sum if paid in lieu of the tax
In Re Lord Thurlow Ex Parte Official Receiver 1895 1 QB 724 Mannikam Patter vs Nanchappa Chettiar 1928 MWN 441 In re Rustom 369 jethaji Peraji Firm v Krishnayya Mad
648 and Burjore and Bhavant Pershad vs Mussumat Bhagana 1883 LR II IA 7 followed
The lump sum figure was based on averages and could not be impeached by reference to a possibility that on some days no business might be done
Comparison with Railways which is a union subject was not admissible
There was no discrimination between operators of public motor vehicles using roads all of whom were affected by the Act There could be no comparison between persons using better kind of roads and those using roads which were not so good
All operators using better kind of roads had to pay heavier tax and there was no discrimination between them as a class