ivil Appeal Nos
998 999 of 1991
From the Judgment and Order dasted 131990 of the Allahabad 480 High Court in CMWP Nos 11465  3085 of 1987
Satish Chandra and Prashant Bhushan for the Appellants
VCMahajan SD Sharma SNTerdol and MrsSuri for the Respondents
The Judgment of the Court was delivered by YOGESHWAR DAYAL J
1
Civil Appeal Nos
998 and 999 of 1991 have been filed against the judgment of the Division Bench of the Allahabad High Court dated 1st March 1990 whereby the Allahabad High Court dismissed the writ petitions filed by the District Exhibitors Association Muzaffarnagar and others as well as some other Theatres upholding the Notification dated 30th April 1986 issued by the Central Government under Section 5 read with sub section 1 of Section 7 of the Employees  Provident Funds and Miscellaneous Provisions Act1952 hereinafter referred to asthe Provident Funds Act The main judgment was delivered by the High Court in the Civil Miscellaneous Writ Petition filed on behalf of Shakti Theatre Civil Lines Bijnore which was followed in the petition filled by the District Exhibitors Association Muzaffarnagar and others and some other writ petitions
Before us also the Notification dated 30th April 1986 of the Goernment of India Ministry of Labour amending the Employees  provident Funds Scheme 1952 For short Scheme  issued under the Provident Funds Act has been challenged
2The Provident Funds Act came into force on 14th March1952
The preamble of the Act states that it is an Act to provide for the institution of provident funds family pension fund and deposit linked insurance fund for employees in factories and other establishments
The Act by Section 13 makes it applicable to every factory referred to in clause a and also to any other establishment referred to in clause b employing twenty or more persons or class of such establishments which the Central Government may by Notification in the Official Gazette specify in that behalf
The scheme under Section 5 alongwith other schemes were issued in 1952
The Provident Funds Act by Notification of the Government of India issued on 31st July 1961 under Section 13 was made applicable to cinema theatres employing twenty or more persons
The hereinafter referred to as the Cinema 481 Theatre Workers Act received the assent of the President on 24th December 1981 and was published in the Gazette on the same day
The Cinema Theatre Workers Act came into force with effect from 1st October 1984
The preamble of the Act says that it is to provide for the regulation of the conditions of employment of certain cine workers and cinema theatre workers and for matters connected therewith
Section 2a defines cinema theatre  to mean a place which is licensed under of the  or under any other law for the time being in force in a State for the exhibition of cinematograph films
Section 24 enacts The provisions of the Employees Provident Funds and Miscellaneouss Provisions Act 1952 as in force for the time being shall apply to every cinema theatre in which five or more workers are employed on any day as if such cinema theatre were an establishment to which the aforesaid Act had been applied by a notification of the Central Government under the proviso to sub section 3 of section 1 thereof and as if each such worker were an employee within the meaning of that Act 4
The Notification of the Government of India amending the Scheme under the Provident Funds Act was issued in conformity with Section 24 of the Cinema Theatre Workers Act
The impugned Notification dated 30th April 1986 is being reproduced for facility of under standing the submissions made on behalf of the appellants NOTIFICATION GSR
In exercise of the powers conferred by Section 5 read with Sub section 1 of Section 7 of the 19 of 1952 the Central Government hereby makes the following Scheme further to further to amend the Employees  Provident Funds Scheme 1952 namely 1
This Scheme may be called the Employees  Provident Funds Amendment Scheme 1986
In the Employees  Provident Funds Scheme in paragraph 1 in sub paragraph 3 in clause b after item XOV11 the following item shall be added namely 482 XOV11 as respect the Cinema Theatre employing 5 or more workers as specified in Section 24 of the Cine WorKers and Cinema Theatres Workers Regulation of Employment Act 1981 50 of 1981 be deemed to have come into force with effect from the 1st day of October 1984 
No S 35016186 SS11 Sd AKBhattari Under Secretary 3041986  5
A perusal of the Notification shows that the Scheme has been retrospectively made applicable in respect of cinema theatres employing five or more workers as specified in Section 24 of the Cinema Theatre Workers Act with effect from 1st October  1984 though the Notification was issued on 30th April 1986
1st October 1984 is also the date of coming into force of Cinema Theatre Workers Act
Before the High Court the main arguments raised by the appellants were a that the Notification dated 30th April 1986 was ultra vires of the provisions of the provident Funds Act inasmuch as the Central Government could not extend the scheme to an establishment which is neither an industry nor a notified establishment under Section 3b of the Provident Funds Act b that there was no liability under the scheme framed by the Central Government to make contribution towards the provident fund in respect of the employees who ceased to be a cinema employee before the Provident Funds Act came into force from 30th April1986and c that the demand of the Provident Funds Commissioner from the employers about the arrears of contribution even for prediscovery period ie the date from which the scheme became applicable to employers who were called upon to pay contribution by notice leads to hardship and injustice and therefore violates Article 14 of the Constitution
483 7
The High Court while dealing with these submissions took the view that Section 24 of the Cinema Theatre Workers Act has applied the provisions of the Provident Funds Act to every cinema theatre in which five or more workers were employed on any day as if such cinema theatre were an establishment to which the provisions of the Provident Funds had been applied by a Notification of the Central Government under the proviso to clause b of sub section 3 of Section 1 of the Provident Funds Act
The High Court in view of the averments made in the counter affidavit filed on behalf of the respondent as well as on the interpretation of the scheme took the view that only those employees who were in employment on 30th April 1986 and had not ceased working in a cinema in respect of whom the benefit was being claimed could be entitled to get the benefit of the scheme
In the notice the demand of contribution was sought under the Sachem in respect of the employees working on 30th April 1986 with effect from Ist October 1984
The High Court took the view that since the demand was made for the employers  contribution in respect of the employees who were working on 30th April 1986 it was wrong to argue that the scheme was being incorrectly applied
Those workers who had left the cinema and had ceased to be its workers on 3oth April 1986 would certainly not be entitled to any benefit under the scheme
Regarding the challenge to the demand by the Provident Fund Commissioner from the employers about the arrears of contribution the High Court felt that there was no substance in that argument
Before us Mr Satish Chandra learned counsel for the appellants submitted i that the Provident Funds Act would not be applicable so long as the Notification as required by the proviso to Section 13b has not been issued ii even if we assume that Section 24 of the Cinema Theatre Workers Act takes the place of a Notification being issued as contemplated by the proviso to Section 13b of the Provident Funds Act an express Notification under Section 5 is required to make the scheme applicable to those establishments and without such a Notification the scheme will not be applicable iii that under Section 6 of the Provident Funds Act the liability is only fixed for employers share of contribution towards Provident Funds and there is no liability fixed to 484 pay employees  share and unless paragraph 30 of the scheme is made applicable there is no inability of the employers to pay employees  share iv that the Notification is very harsh and unjust as the appellants are being asked to pay the contribution of the employees share to the Provident Fund Account retrospectively without the corresponding right of employer to recover it from the wages of employees
It may be mentioned that the vires of any of the provision of the Provident Funds Act or the Scheme has not been challenged before us
As would be seen from the preamble of the Provident Funds Act the Act is intended for the benefit of the employees
It is also so clear from its objects and reasons extracted below The question of making some provision for the future of the industrial worker after he retires or for his dependants in case of his early death has been under consideration for some years
The ideal way would have been provision through old age and survivors  pensions as has been done in the industrially advance countries
But in the prevailing conditions in India the institution of a pension scheme cannot be visualised in the near future
Another alternative maY be for provision of gratuities after a prescribed period of service
The main defect of a gratuity scheme however is that amount paid to a worker or his dependants would be small as the worker would not himself he making any contribution to the fund
Taking into account the various difficulties financial and administrative the most appropriate course appears to be the institution compulsorily of contributory provident funds in which both the worker and the employer would contribute
Apart from other advantages there is the obvious one of cultivating among the workers a spirit of saving something regularly
The institution of a provident fund of this type would also encourage the stabilisation of a steady labour force in industrial centres
It is a legislation for the benefit of the worker sections of the society and the beneficial legislation is made applicable to cinema theatres if it employs five or more workers
The classification of cinema theatres as a separate class for purposes of coverage under the Provi 485 dent Funds Act has also not been challenged
Further no challenge has been made to any of the provision of the Cinema Theatre Workers Act
Before we deal with the submissions of learned counsel for the appellants we may notice the relevant part of provisions of the Provident Funds Act and the Scheme
Section 13 of the Provident Funds Act reads as follows Subject to the provisions contained in Section 16 it applies a to very establishment which is a factory engaged in any industry specified in Schedule 1 and in which twenty or more persons are employed and b to any other establishment employing twenty or more persons or class of such establishments which the Central Government may by notification in the Official Gazette specify in this behalf Provided that the Central Government may after giving not less than two months  notice of its intention so to do by notification in the Official Gazette apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification
Section 51 and 2 provide as follows 5
Employees  Provident Fund Schemes 1 The Central Government may by notification in the Official Gazette frame a Scheme to be called the Employees  Provident fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the establishments or class of establishments to which the said Scheme shall apply and there shall be established as soon as may be after the framing of Scheme a Fund in accordance with the provisions of this Act and the Scheme
1 A   1 B   486 2 A Scheme framed under sub section 1 may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme 14
The relevant part of Section 6 reads as follows 6
Contributions and matters which may be provided for in Schemes The contribution which shall be paid by the employer to the Fund shall be eight and one third per cent of the basic wages dearness allowance and retaining allowance if any for the time being payable to each of the employees whether employed by him directly or by or through a contractor and the employee s contributions shall be equal to the contribution payable by the employer in respect of him and may if any employee so desires b an amount exceeding eight and one third per cent of his basic wages dearness allowance and retaining allowance if any subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section
Para 11 and relevant parts of paras 13a and 13b of the Scheme read as follows 1
Short title and application 1 This Scheme may be called the Employees  Provident Funds Scheme 1952
2   3a Subject to the provisions of Sections 16 and 17 of the Act this Scheme shall apply to all factories and other establishments to which the Act applies or is applied under sub section 3 or sub section 41 of Section 1 or Section 3 thereof    b Provisions of this Scheme shall     xcviii as respect the cinema theatres employing 5 or more workers as specified in Section 24 of the Cine Workers and Cinema Theatres Workers Regulations of Employment Act 1981 50 of 1981 be deemed to have come into force with effect from the 1st day of October 1984 487 16
The relevant parts of paras 30 and 32 of the Scheme read as follows 30
Payment of contribution 1 The employer shall in the first instance pay both the contribution payable by himself in this Scheme referred to as the employer s contribution and also on behalf of the member employed by him directly or by or through a contractor the contribution payable by such member s in the Scheme referred to as the member s contribution
2   3 It shall be the responsibility of the principal employer to pay both the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also administrative charges
Explanation     32
Recovery of a member s share or contribution 1 The amount of a member s contribution paid by the employer or a contractor shall notwithstanding the provisions in this Scheme or any law for the time being in force or any contract to the contrary be recoverable by means of deduction from the wages of the member and otherwise Provided that no such deduction may be made from any wage other than that which is paid in respect of the period or part of the period in respect of which the contribution is payable    
Provided further that where no such deduction has been made on account of an accidental mistake or a clerical error such deduction may with the consent in writting of the Inspector be made from the subsequent wages
2   3   17
A combined reading of Section 6 of the Provident Funds Act 488 and paras 30 to 32 of the Scheme is that the contribution to the Provident Fund is to be 12 12 of the basic wages and dearness allowance that is to be borne equally by the employer and the employee and that the employer is to pay the whole of it half on his account and the other half on account of the employee and he is to recoup himself by deducting it from the wages of the employee
A bare reading of Section 24 of the Cinema Theatre Workers Act shows that it has fulfilled the purpose of the Notification which the Central Government could have issued under Section 13b of the Provident Funds Act read with the proviso
Therefore no further Notification as contemplated by Section 13b of the Provident Funds Act was necessary
Section 24 has taken the place of the Notification contemplated by Section 13 b of the Provident Funds Act read with the proviso thereto
Therefore the Provident Funds Act became applicable to the theatres who employ five or more workers with effect from 1st October 1984
Again in view of Section 6 of the Provident Funds Act noticed earlier the employers became liable to pay their contribution to the fund as soon as the Act came into force ie wef 1st October 1984
It is also clear from reading of Section 5 of the Provident Funds Act that before the Provident Funds Scheme can become applicable the Central Government has to frame a Scheme and also specify the establishment to which the said Scheme shall apply
Till the impugned Notification dated 30th April 1986 was published the Scheme was not applicable to such cinema theatres who are employing less than 20 employees and it became applicable to cinema theatres employing five or more workers only when the impugned Notification was issued under Section 5 of the Provident Funds Act
It is only by the impugned Notification that the scheme was amended so as to be made applicable in respect of cinema theatres employing five or more persons
Without such a Notification the Scheme would not have became applicable
The Notification on the face of it shows that the Scheme has been made applicable to the cinema theatres covered by the Notification with effect from 1st October 1984
This could be done in view of not only the provisions of Section 52 of the Provident Funds Act but also in view of Section 71 of the Provident Funds Act
Both these provisions confer express powers of making the Scheme applicable retrospectively
The question however is whether by making the Scheme with retrospective operation the employer could be saddled with the 489 liability to pay employees  contribution wef
1st October 1984 and if not from what other date The answer to the question turns upon the implementation of the Scheme and in particular the giving effect to paras 30 and 32 of the Scheme
Para 30 provides that the employer shall in the first instance pay both the contributions payable by himself and also the contribution payable by the employees
It shall be the responsibility of the principal employer to pay both the contributions payable by himself and also in respect of the employees directly employed by himself and also in respect of the employees directly employed by himself and also in respect of the employees employed by him or through a contractor
Para 32 confers upon the employer the right to recover the employees contribution that has been paid by him under para 30
That could be recovered by the employer by means of deduction from the wage of the employees who are liable to pay
First proviso to para 321 however limits that liability in expressly stating that no such deduction may be made from any wage other than that which is paid in respect of the period of which the contribution is payable
It is obvious from paras 30 and 32 that the employer has to pay the contribution of the employee s share but he has a right to recover that payment by deducting the same from the wages due and payable to the employees
It is significant to note that the deduction is not from the wages payable for any period but only from the wages for the period in respect of which the contribution is payable and no deduction could be made from any other wages payable to the employees
In other words the payment of employees contribution by the employer with the corresponding right to deduct the same from the wages of the employees could be only for the correct period during which the employer has also to pay his contribution
In the instant case for the period from 1st October 1984 up to the date of the impugned Notification the employer has paid the full wages to the employees since during that period there was no scheme applicable to his establishment
By retrospectively applying the scheme could he be asked to pay the employees contribution for the period antecedent to the impugned notification
We think not
The Act and the Scheme neither permit any such payment nor deduction
He cannot be saddled with the liability to pay the employees  contribution for the retrospective period since he has no right to deduct the same from the future wages payable to the employees
Mr Vikram Mahajan learned counsel for the Central Government submitted that it may be possible for the employers to make deduction from subsequent wages of the workmen with the consent in writing of the Inspector as required under the third proviso to 490 para 321 of the Scheme
This submission cannot be accepted since the third proviso could be taken advantage of by the employer only where no deduction has been made from the wages of the employees due to accidental mistake or clerical error when the scheme is operative
Such deduction which has not been made by accidental mistake or clerical error could be made from the subsequent wages with the consent in writing of the Inspector concerned
The case with which we are concerned is not covered by the third proviso
It is not the case of any body that the employer could not make deduction from the wages of the employees by accidental mistake or clerical error
The employer indeed could not have made the deduction prior to the impugned notification dated 30th April 1986 since the Scheme was not then applicable
The Scheme has been given retrospective effect wef
1st October 1984
The employer therefore cannot take the benefit of the third proviso to para 321 for deducting the employees contribution in their wages payable in future
Reference was also made to the decisions of this Court in Ms Orissa Cement Ltd vs Union of India 1962 Suppl 3 SCR 837 and in Ms Lohia Machines Ltd vs Union of India and Ors 19652 SCR 686 by learned counsel for the appellants in support of his contentions
It will be noticed that the Supreme Court in Orissa Cement Ltd 1962 Suppl 3 SCR 837 was concerned with the validity of certain Notifications which were struck down as infringing Article 191g of the Constitution
The decision has no applicability to the facts of the present case
Equally the decision in Lohia Machines Ltd has also no applicability to the facts of the present case
In the result and for the foregoing reasons we allow the appeals as indicated above by setting aside the judgment of the High Court
We declare that the appellants are not liable to pay the employees contribution for the period from 1st October 1984 to 30th April 1986
In the facts and circumstances of the case however we make no order as to costs
GN Appeals partlly allowed


Summary:
Under the taxing power contained in the several Motor Vehicles Tax Acts in vogue in the Respondent States provision has been made for taxation as also for levy of additional tax
The petitioners who hold All India Tourist Permits challenged the constitution validity of the additional tax on the ground that it was neither compensatory nor regulatory and therefore was violative of Articles 191 g and 301 of the Constitution
In respect of the State of Punjab and Haryana which have a common Act an additional contention was raised to the effect that Rule 8v of the Punjab Motor Vehicles Taxation Rules 1925 provides total exemption from liability of tax if the vehicle was brought into the State and kept for use within the State for a period not exceeding 30 days in a year and since the vehicles registered outside Punjab and Haryana States are not kept within the State for more than 30 days in a year the demand of tax in the face of Rule 8v is contrary to law
Disposing of the Writ Petitions this Court HELD  1
Law is settled that to uphold levy of tax as in the present case what is necessary is existence of a nexus between the subject and 525 the object of the levy and it is not necessary to show that the whole or a substantial part of the tax collected is utilised
Hence the demand of tax is not open to challenge and the plea raised against the levy whether of tax or additional tax is not justified
Under the taxing provision a statutory outer limit has been provided and the actual amount is left to be determined by the State Government by notification
Obviously discretion is left with the State Government to demand at rate which in a given situation would be justified 
Once it is held that the tax is either conmpensatory or regulatory that forms the guideline for the State Government to keep in view to determine the rate at which within the upper limit fixed by law the demand has to be made
525E H Automobile Transport Rajasthan Ltd vs The State of Rajasthan and Ors  1963 1 SCR 491 Ms International Tourist Corporation and Ors
vs State of Haryana and Ors
1981 2 SCC 318 and BA Jayaram and Ors
vs Union of India and Ors
 1984 SCC 168 relied on
The word kept  has not been defined in the Punjab Motor Vehicles Taxation Act 1924
It must  therefore be interpreted in its ordinary popular sense consistent with the context
The ordinary dictionary meaning of the word keep  is to retain   to maintain  or cause to stay or remain in a place  or to detain  or to stay or continue in a specified condition  position etc
 It is something different from a mere state of transit or a course of journey through the State 
it is something more than a mere stoppage or halt for rest food or refreshment etc
in the course of transit through the territory of the State
That being the position rule 8 v which uses the term kept for use  may not cover a case of bare transit and in terms of the rule exemption is available for vehicles kept upto 30 days in a year
In that view of the matter tourist vehicles registered outside the State of Punjab and Haryana when brought into these two States for regular use and not by way of transit and when used for more than 30 days in a year would attract taxability otherwise the exemption provision in rule 8v would be available 530C F Ms International Tourist Corporation and Ors
vs State of Haryana and Ors
  1981 2SCC 318 and State of Mysore and Ors
vs Ms TV Sundaram Iyengar  Sons P Ltd   referred to
The question of exigibility of tax in the State of Punjab and Haryana with reference to rule 8v of the Punjab Motor Vehicles Taxation Rules 1925 is left to be determined in individual cases as and when raised
530G