IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWPs No.307 to 309 of 1997; 211, 420, 422, 725 of 1998; 87, 364, 477, 503 of 1999; and 147, 401, 464 to 467, 472 of 2001 Reserved on : December 2, 2008 Decided on : December 11, 2008 CWP No.307/1997 M/s Jaiparkash Industries Limited …Petitioner. Versus State of H.P. and others …Respondents. CWP No.308/1997 M/s Jaiparkash Industries Limited …Petitioner. Versus State of H.P. and others …Respondents. CWP No.309/1997 M/s Jaiparkash Industries Limited …Petitioner. Versus State of H.P. and others …Respondents. CWP No.211/1998 M/s Samtel Electron Devices Ltd. …Petitioner. Versus State of H.P. and others …Respondents. CWP No.420/1998 M/s Pasupati Spinning & Weaving Mills Ltd. …Petitioner. Versus State of H.P. and others …Respondents. CWP No.422/1998 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. CWP No.725/1998 NHPC …Petitioner. Versus State of H.P. and others …Respondents. CWP No.87/1999 M/s Continental Foundation and another…Petitioners. Versus State of H.P. and others …Respondents. …2… CWP No.364/1999 M/s Him Ispat Ltd. …Petitioner. Versus State of H.P. and others …Respondents. CWP No.477/1999 M/s Continental Foundation & another…Petitioners. Versus State of H.P. and others …Respondents. CWP No.503/1999 M/s Fermentapharma Biodil Ltd. …Petitioner. Versus State of H.P. and others …Respondents. CWP No.147/2001 M/s Continental Foundation & another…Petitioners. Versus State of H.P. and others …Respondents. CWP No.401/2001 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. CWP No.464/2001 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. CWP No.465/2001 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. CWP No.466/2001 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. CWP No.467/2001 Chief Engineer, BBMB …Petitioner. Versus State of H.P. and others …Respondents. …3… CWP No.472/2001 Rajesh Sharma …Petitioner. Versus State of H.P. and others …Respondents. Coram The Hon’ble Mr. R.B. Misra, Judge. The Hon’ble Mr. Justice Surjit Singh, Judge. Whether approved for reporting?1 Yes. For the Petitioners : Mr. A.K. Chitlay, Senior Advocate, with Mr. K.D. Shreedhar, Advocate; Mr. M.M. Khanna, Senior Advocate, with Ms Pushpa Atri, Advocate; Mr. K.D. Sood, Advocate; Mr. N.K. Sood, Advocate, Mr. Surinder Sharma, Advocate. For the Respondents : Mr. R.K. Bawa, Advocate General, with Mr. P.K. Sharma, Additional Advocate General, and Mr. R.M. Bisht, Deputy Advocate General. Per Surjit Singh, Judge This bunch of 18 Civil Writ Petitions raises common questions and, therefore, all the writ petitions are being disposed of by a single judgment. Vires of certain provisions of Himachal Pradesh Passengers and Goods Taxation Act, 1955, as amended, from time to time, particularly by Amendment and Validation Act No.20 of 1997, have been challenged. Also these writ petitions are in the nature of certiorari, as the assessment orders, passed by Excise and Taxation Authorities, in accordance with the provisions of The Himachal Pradesh Passenger and Goods Taxation Act, 1955, as amended from time to time, especially by Amendment and Validation Act No.20 of 1997, have been sought to be quashed. Whether reporters of the local papers may be allowed to see the judgment? …4… 2. Facts relevant for the disposal of these petitions may be noticed. Petitioners, in all the writ petitions, are carrying on different kinds of business. None of them is in the business of carrying passengers or transporting goods by motor vehicles. Some of the petitioners are carrying the business of generating and distributing electricity, while others have their factories, where goods are manufactured. Writ petitioners, in some of the cases, are having buses, by which their employees are carried from their residences to the sites of work and back to their residences and also the children of the employees are carried to schools and back home, by such buses. Petitioners in some of the cases are having private trucks (private service carriers), which are used for carriage of raw-material to the sites of work and finished goods to various places and also for carriage of debris, muck, silt, etc., from the site of generation of electricity. Petitioners have averred that they are not using the buses or the trucks for carriage of passengers or goods nor are they doing the business of carriage of passengers or goods, but they are using their buses and trucks only for the purpose of carrying their employees or the wards of their employees or the raw-material required by them or the finished goods manufactured by them or for carrying debris or silt to keep the work-sites clear. They have pleaded that since they do not carry the passengers and goods by their buses and trucks for hire or reward, they are not liable to pay any tax, under the provisions of The Himachal Pradesh Passengers and Goods …5… Taxation Act, 1955, as amended, from time to time, especially by Act No.20 of 1997. 3. It has been stated by NHPC (petitioner in CWP No.725 of 1998) that earlier the respondents had charged tax from the petitioner. Action of the respondents was challenged, by filing a Civil Writ Petition, being CWP No.1733 of 1995. This Court, vide judgment dated 27th March, 1997, reported as National Hydroelectric Power Corpn. versus State of H.P. and others, 1998 (1) Shim.L.C. 119, allowed that writ petition and directed the respondents to refund the tax already collected. While allowing the said writ petition, it was, inter alia, held that the buses of NHPC were neither public service vehicles, within the meaning of Section 2(35) of the Motor Vehicles Act, nor private service vehicles, within the meaning of Section 2(33) of the Motor Vehicles Act, as the persons were not carried for hire or reward and, therefore, the charging provision of The Himachal Pradesh Passengers and Goods Taxation Act, 1955, contained in Section 3(1) was not attracted. Explanation to Section 3(1), which stated that where passengers are carried or goods are transported, by a motor vehicle, without charging fare or freight, tax shall be levied and paid as if such passengers were carried or goods transported, at the normal rate prevalent on the route, was held to cover the carriage of passengers or goods only in private carriers or public service vehicles and not a vehicle owned by an employer for carrying his employees to the work site and back or the children of the employees to school and back, without charging any fare. Also, …6… it was held that for charging tax, by invoking the explanation to Section 3(1), routes were required to be prescribed, but since no routes had been prescribed the explanation could not come to the rescue of the Taxation Authorities. It has been alleged by the NHPC that Amendment and Validation Act No.20 of 1997 has been passed with a view to neutralizing the judgment passed by this Court in the earlier writ petition for the refund of the tax already charged. 4. Petitioners have also challenged the validity of the Principal Act, as amended by Act No.20 of 1997, which, according to them, seeks to impose tax on motor vehicles, alleging that the State Legislature is not competent to impose such a tax. It is stated that State Legislature’s competence is limited to the imposition of tax on goods and passengers, vide Entry No.56 of List-II of Seventh Schedule of the Constitution of India. 5. After the amendment of the Principal Act, carried out by Act No.20 of 1997, Authorities constituted, under the Act, have issued notices for recovery of tax and have also passed assessment orders against some of the petitioners. Those orders have been challenged, on the ground that the same are illegal, being based on ultra vires provisions of Himachal Pradesh Passengers and Goods Taxation Act, as amended, from time to time, particularly by Act No.20 of 1997. 6. Respondents defend the vires of the Principal Act as also the Amending Act. They also defend the notices for recovery of tax as also the assessment orders passed by the …7… Officers appointed and the Authorities constituted, under the Act. They have stated that the Act has been passed by the State Legislature, in accordance with Entry 56, List-II of Seventh Schedule of the Constitution of India, and it taxes not the motor vehicles but the passengers and the goods carried by motor vehicles. It is pleaded that there is nothing wrong in giving retrospective effect to the amended or newly incorporated provisions of the Amending Act No.20 of 1997. It has been stated that there were defects and deficiencies in the Principal Act, which were noticed and pointed out by this Court in the judgment, reported as National Hydroelectric Power Corpn. Ltd. versus State of H.P. and others, 1998(1) Shim.L.C. 119, and that to cure those defects and to remove the deficiencies, Amending Act No.20 of 1997 was passed and the State Legislature had the competence to do so. 7. For better appreciation of the issues involved, it is desirable to have a look at the relevant provisions of the Principal Act, before its amendment by the Amendment and Validation Act No.20 of 1997, and how they were interpreted by a Division Bench of this Court in National Hydroelectric Power Corp. Lt. versus State of H.P. and others, 1998(1) Shim,L.C. 119, with regard to the liability of passengers and goods carried by motor vehicles to pay tax, as also the amendments, which have been carried out by the aforesaid Act No.20 of 1997, for making the passengers and goods carried in the private buses and the trucks of the petitioners liable to tax, under the Act. …8… 8. Preamble of the Act indicated that it was meant to charge not all the vehicles, carrying passengers and goods, but only “certain” vehicles. Section 2(c) provided inclusive definition of “fare”, which read that “fare” included sums payable for a seasonal ticket or in respect of the hire of a contract carriage. Section 2(e) defined “Motor Vehicle” as any transport vehicle and included a motor vehicle used for carrying of passengers or goods, or both, for hire or reward, in contravention of the provisions of the Motor Vehicles Act. Section 2(aa) defined “business” to mean business of carrying passengers and goods by motor vehicles. Section 2(g) defined “passenger” to mean any person travelling in a motor vehicle but did not include the driver or the conductor or any employee of the owner of the vehicle travelling in bonafide discharge of his duties, in connection with the vehicle. 9. Section 3(1), which was and still is the charging provision had an explanation to it, which read as under: “When passengers are carried and goods are transported by a motor vehicle, and no fare or freight whether chargeable or not 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.” 10. Section 3-A, which provided and still provides for levy of surcharge, stated that surcharge, on the tax payable by every passenger carried by a stage/contract carriage, shall be charged. 11. It were mainly the aforesaid provisions of the Principal Act (before their amendment by Act No.20 of 1997), …9… which were the subject of interpretation by a Division Bench of this Court in National Hydroelectric Power Corpn. Ltd. versus State of H.P. and others (supra). 12. On behalf of the State, it was urged that it was by virtue of the Explanation to Section 3(1), i.e. the charging provision of the Act, that the employees or the children of the employees of the petitioners carried in the buses were liable to pay tax. Relevant portion of Section 3(1) of the Act says that there shall be levied, charged and paid to the State Government a tax on all fares and freights, in respect of passengers carried and goods transported by motor vehicles, on such rates, not exceeding 50% of the value of the fare or freight, as the case may be, and as the Government may, by notification, direct. Explanation to this section read that when passengers are carried and goods are transported by a motor vehicle and no fare or freight, whether chargeable or not, has been charged, the tax shall be levied and paid as if passengers were carried or goods transported at normal rates prevalent on the route. The Court rejected the argument holding that Explanation to Section 3(1) was not to be read in isolation, but alongwith the definitions of “motor vehicle” and “passenger”, as appearing in clauses (e) and (g), respectively, of Section 2 of the H.P. Passengers and Goods Taxation Act, 1955, and when so read it meant that it was applicable only in the case of passengers carried in public service vehicles, because the meanings of “motor vehicle” and “passenger” used in the definitions were no different from those given in clauses (e) and …10… (g), respectively, of Section 2 of the Act. The Court observed that petitioners’ vehicles did not fall within the definition of “motor vehicle”, which meant any transport vehicle, because transport vehicle, according to Section 2(47) of the Motor Vehicles Act, 1988, meant a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle. Buses of the petitioners were, admittedly, not public service vehicles, goods carriage or educational institutional buses. They were sought to be covered, on behalf of the State, in the category of private service vehicles. The Court noticed definition of “private service vehicle” appearing in Section 2(33) of the Motor Vehicles Act, 1988, which reads as follows: “2(33) ‘private service vehicle’ means a motor vehicle constructed or adapted to carry more than six persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with, his trade or business otherwise than for hire or reward but does not include a motor vehicle used for public purposes.” The vehicles of the petitioners were held to be not covered even by this definition, avowedly for the reason that the definition of “business”, as given in H.P. Passengers and Goods Taxation Act, 1955, meant only the business of carrying passengers and goods by motor vehicles and no other business and admittedly the petitioners were not doing business of carrying passengers and transporting goods by motor vehicles. We may notice that the learned Division Bench referred to the definitions of transport vehicle/public service vehicle and some other words and expressions appearing in the Motor Vehicles …11… Act, because Section 2(j) of the Himachal Pradesh Passengers and Goods Taxation Act, 1955, provides that the words and expressions used in this Act, but not defined, shall have the meanings assigned to them in the Motor Vehicles Act, 1988. 13. Another reason why the argument of the State did not find favour with the learned Division Bench was that though the explanation to Section 3(1) provided that the tax was to be levied and paid, in respect of the passengers carried without payment of fare, as if such passengers were carried at the normal rate of fare prevalent on the route, yet the Act did not specify the route nor did it define the term. And the definition of “route” appearing in the Motor Vehicles Act, in Section 2(38), was irrelevant, in the context of this Explanation. It was further held that expression “normal rate”, appearing in the Explanation was unascertainable and for that reason also it was not possible to give effect to the Explanation, even if some route was assumed to exist. 14. Learned Division Bench allowed the writ petition and held that the employees and the children of the employees, carried in the buses of the petitioners, were not liable to be taxed, under Section 3(1) of the Act and consequently the money charged from the petitioners, by way of tax, was ordered to be refunded. 15. To bring the employees and the children of the employees, travelling without payment of fare in the buses of the employers, and also to bring the goods carried in the private carriages and also to validate the collection of the tax …12… already made, the respondents brought about various amendments in the preamble and various provisions of the Act, with retrospective effect, viz. the date of the enforcement of the Principal Act of 1955. The changes, which were brought about, and are relevant for the purpose of deciding these writ petitions are as follows: (a) From the preamble of the Act word “certain” has been omitted. (b) Definition of “business” has been amended, whereby, any trade, commerce or manufacture or any adventure or concern, in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture or adventure or concern, is carried on, with a motive of gain or profit, or whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern have been included in the definition of “business”. (c) Definition of “fare” or “freight” has been changed. (d) Definition of “Private Service Vehicle, which reads as follows, has been inserted: “A motor vehicle constructed or adapted to carry more than six persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with, his trade or business.” (e) Definition of “road”, which reads as follows, has been introduced: “A track for travel or transportation to and fro, serving as a means of communication, between two places.” (f) Definition of “Transport Vehicle”, which reads as follows, has been added: …13… “A public service vehicle, a goods carriage, an educational institution bus or a private service vehicle.” (g) Sub-section (1A) has been added to Section 3 of the Principal Act, in place of Explanation to Section 3(1), which is as follows: “1(A) Notwithstanding anything contained in sub-section (1), when passengers are carried and goods are transported by a motor vehicle and: (i) no fare or freight, whether chargeable or not has been charged, or (ii) fare or freight has been charged at a concessional rate, the tax at the rate as directed by notification by the Government under sub-section (1) shall be levied, charged and paid as if the passengers were carried or goods were transported either on fares and freights fixed by the competent authority under the Motor Vehicles Act for different classes of roads and motor vehicles in the State or on the fares and freights for different classes of roads and motor vehicles, specified in Schedule-I to this Act, whichever is higher.” (h) Amending Act No.20 of 1997, has been given retrospective effect to the Act by the provision of Section 8, which as follows: “8. The amendments to the Principal Act, made by sections 2,3,4,5,6 and 7 of this Act shall and shall always be deemed to have been made retrospectively from the date of the commencement of the Principal Act.” (i) Actions taken or purported to have been taken, under the Principal Act, before the passing of Act No.20 of 1997, have been validated by Section 9(1), which reads as follows: “9(1) Notwithstanding anything contained in any judgement, decree, or order of any court or other authority to the …14… contrary, any assessment, levy charge or payment of any tax on passengers and goods carried by road (hereinafter referred to as the ‘aforesaid tax’), made or purporting to have been made or nay action taken or anything done under the provisions of the Principal Act at any time on or after the commencement of that Act, but before the commencement of the Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 (hereinafter referred to as ‘this Act’), shall be deemed to be a valid and effective, as if such assessment, levy, charge, payment or collection or action or thing had been made, taken or done under the provisions of the said Act as amended by this Act and accordingly- (i) the aforesaid tax assessed, levied, charged, paid or collected or purporting to have been assessed, levied, charged, paid or collected under the provisions of the said Act, before the commencement of this Act shall be deemed to be and always be deemed to have been validly assessed, levied, charged, paid or collected in accordance with law; (ii) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of, and no enforcement shall be made by any Court or Authority of any decree or order directing the refund of, any such aforesaid tax which has been collected; (iii) recoveries, if any, shall be made in accordance with the provisions of the said Act of all amounts which would have been collected thereunder as such aforesaid tax if this Act had been in force at all material times; and (iv) anything done or any action taken (including any rule or order made, notification issued or direction given or exemption granted or penalty imposed) under the said Act before the commencement of this Act shall be deemed always to have been validly done or taken in accordance with this Act.” …15… 16. Following points were raised on behalf of the petitioners, during the course of hearing of the matters: (i) Both the Principal Act and the Amendment and Validation Act No.20 of 1997 are ultra vires of the Constitution of India, inasmuch as tax is levied on the vehicles, which is contrary to Entry 56, List II of Seventh Schedule of the Constitution of India. (ii) Employees and children of the employees of the petitioners are not covered by the definition of “passenger”, as appearing in the Himachal Pradesh Passengers and Goods Taxation Act, inasmuch as they are carried free of charge. (iii) Definitions of “passenger”, “business”, “fare” and “road” are artificial and unnatural, as also contrary to the purpose and object of the Act and, hence, ultra vires and unconstitutional. (iv) Material carried in the trucks of the petitioners is not leviable to tax, because the same belongs to the petitioners and, hence, there cannot be any question of charging freight thereon. 17. We have given our best thought to the submissions made on behalf of the parties. We do not find any merit in the contention that the Himachal Pradesh Passengers and Goods Taxation Act, as it stood prior to the Amendment and Validation Act No.20 of 1997, or after the passing of the aforesaid Amendment and Validation Act, has the effect of taxing the vehicles, carrying passengers or goods and, hence, the State Legislature does not have the competence to enact it. Not only from a reading of the Preamble of the Act, but also various provisions, it is more than clear that the Act seeks to tax not …16… the motor vehicles but the passengers and the goods carried therein. Preamble of the Act says that it has been enacted to provide for levying a tax on passengers and goods carried by road in motor vehicles. Prior to the amendment, the Preamble read that it was an Act to provide for levying a tax on passengers and goods carried by road in certain motor vehicles. Word “certain” has been omitted by the Amendment and Validation Act No.20 of 1997. The change has been effected to remove the impression that the Act is meant to levy tax only on those passengers and goods, which are carried by public service vehicles or public carriers. This change in no way suggests that now the taxation is of vehicles and not the passengers and goods carried therein. 18. The charging provision of the Act is Section 3(1), which says that tax shall be levied, charged and paid to the State Government, on all fares and freights, in respect of passengers carried and goods transported by motor vehicles, as the Government may, by notification, direct. Prior to the passing of the Amendment and Validation Act No.20 of 1997, there was an Explanation to this charging