STATE OF ASSAM & ORS. v.

LABANYA PROBHA DEBI April 11, 1967

[K. SUBBA RAO, C.J., M. HIDAYATULLAH, R. S. BACHAWAT,

J. M. SHELAT AND C. A. VAIDIALINGAM, JJ.]

Con.!litution of India, 1950; A.rt. 301, Entry ~? of f:ist II and E!fll{; 35 of List Ill-Taxation of motor vehicles and Prmc1p/es of tax•twn of motor vehicles, difference-Art. 301, scope of.

Under the Assam Motor Vehicles Taxation Act, 1936, no motor vehicle could be wed in the Assam Province .unless the owner .thereof had paid in respect of it a tax at the appropr1ate rate specified 1_n the Schedule to the Act.

The Schedule was amended from time to 11me by the substitution of new Schedules and as a result of such amendments in 1963 and 1966, the tax O'll stage carriage motor vehicles was gradually raised.

In a writ petition, filed by the respondent, challenging the validity of the Amending Acts of 1963 and 1966, the High Court. held. that the

Amendin~ Acts were made in respet !'f the matter .contained in Entry 35 of the Concurrent List, namely prmc1ples of taxation of motor vehicles, and, as the provisions of the Amending Acts were inconi!ltent with those of the existing Jaw, namely, the 1936 Act, the Amendmg Acts were void, because, the assent of the President as required by Art. 254 was not received.

In appeal .to this Court,

HELD : (i) Taxes on vehicles connote the' liability to pay taxes at the rates at which the taxes are to be levied, while, the ex:.pression ", Principles of taxation" denote5 rules of guidance in the matter of taxa. t1on.

The Amending Acts do not come into conflict with the existing law in respect of any principles of taxation within the meaning of Entry 35 of the Concurrent List, but only deal with a subject matter, namely, taxes on vehicles within the meaning of Entry 57 of the Stato List which is exclusively within the legislative competence of the State Legi'stature; and "' wch. there is no scope for invoking Art. 254.

[615A-C] . (iiJ_ lt is only a comparatively sm11l proportion of the general expend1.lure incurred on new roads and the mainte.nance of the old roads that was realised through the impugned taxation. Therefore, the Amending ct~ re only regulatory measures imposing compensatory taxes for faci~ htating trade, comme-rcc and intsrcourse.

The Acts arc, hence. not hit by Art. 301 of the Constitution.

[616CJ

The Automobile Transport (Raj1Utha11) Ltd. v. The State of Rajasthan, [1963] 1 S.C.R. 491, followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No, 38 of 1967.

Appeal from the judgment and order dated December I, 1966, of the Assam and Nagaland High Court ill' Civil Rule No. 145 of 1964.

S. V. Gupte, Solicitor-General and Naunit Lal, for the appellants.

Ram Labhaya Obhrai, I. M. Obhrai, S.K. Mehta and K. L.

Mehta, for the a-espondent.

The Judgment of the Court was delivered by Subbarao C.J.

This appeal by certificate is directed against the order of the High Court of Assam declaring that the Assam Motor Vehicles Taxation (Amendment) Acts of 1963 and 1966 were repugnant to the Assam Motor Vehicles Taxation Act, 1936 (Assam Act9 of 1936), hereinafter called the Principal Act, and, therefore, void as they were made in contravention of the provisions of Art. 254(2) of the Constitution.

The facts are in a small compass and they are as follows The Principal Act came into force on March l', 1937. The assent of the Governor-General in Council was given under section 35 of the Government of India Act, 1935. This Act imposes tax on motor vehicles in the Province of Assam. In 1955 the Principal Act was amended by Assam Act IV of 1956 and it had received the assent of the President.

Subsequently the Principal Act was amended by Act 15 of 1963, but the Bill was introduced in the Assam State Assembly with the previous sanction of the President and it came into force on April 1, 1963. Subsequent to the filirig of the petition, out of which the present appeal has arisen, the Principal Act was again amended in the year 1966 and it came into force on April 1, 1966. The tax on the stage carriage motor vehicles was gradually raised under each amendment and under the last of the amendments a sum of Rs. 56/- was imposed per seat.

Under the last amendment Act the petitionerrespondent had to pay a sum of Rs. 1680/- as tax for the stage carriage she was plying.

The respondent filed a petition under Art. 226 of the Constitution in the High Court for declaring the amending Acts void and for other reliefs.

The petition was heard by a Division Bench-of the High Court and the learned Judges delivered two separate but concurrent judgments.

They held that the Amending Acts of 1963 and 1966 were void and gave the petitioner-respondent the reliefs asked for. Hence the present appeal.

The main question in the appeal is whether the said Amending Acts increasing the rate of tax are void for constitution incompetence. The High Court in effect held that the provisions of the said Amending Acts were inconsistent with those of the existing law, namely, the Principal Act and, therefore, as they had not received t)!e assent of the President, were void under Art. 254 of the Cci'nstitution. This conclusion was arrived at on the ground that the Amending Acts were made -i~ respect of the matter contained in entry 35 of the Concurrent List.

To appreciate the contentions it will be convenient to read at the outset the relevan: Articles of the Constitution.

Entry 57 of List II of the Seventh Schedule to the Constitution: Taxes on vehicies, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III.

Entry 35 of List Ill Mechanically propelled vehicles including the principle; on which taxes on such vehicles are to be levied.

Art. 254 ( 1) If any provision of law made by the Legislature of a State is repugnant . . . . . to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2) ........ the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. ( 2) Where a law made by the Legislature of a State .vith respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an. earlier law made by Parliament or an existing law with respect to that matter, then the law so made by the Legislature of such State shaU, if it has

be<in reserved for the consideration of the President and has received his assent, prevail in that State.

Art. 366(10) Existing law means any law, ordi- nance or bye-law, rule or regulation passed or made before the commencement of the Constitution by any Legislature, authority or person having power to make such a law, ordinance or bye-law, rule or regulation.

The application of the said provisions to the subject-matter OI

the present appeal leads to the following result.

Tho Principat Act was an existing Jaw. If the Amending Acts were mad• under entry 35 of the Concurrent List and if they were in conflict with any of the provisions of the existing law, to the extent of the inconsistency the said amendments would be void. But, on the other hand, if the Amending Acts were passed under entry 57 of List II of the Seventh Schedule, they would fall outside the scope of Art. 254 of the Constitution, as Art. 254 would apply only to

a conflict between the provisions of an "existing law" and those of tho post-constitution law in respect of matters enumerated in any of the entries of the Concurrent List.

The learned Solicitor General raised before us two points. namely. (i) Art. 254 of the Constitution posits the existence of

SUPREME COURT REPORTS [!967] 3 S.C.ll.

two parallel laws----one an "existing law" and the other a post- Constitutional law-in respect of any one of the entries in the Concurrent List and the provisions thereof are in conflict with each other; but it has no application to a case where the State Legislature, within the scope of its legislative competency, amends an existing law so as to extinguish a parfof it.

(2) The amending Acts were only made under entry 57 of List II and, therefore, there is no scope for invoking the provisions of Art. 254 of the Constitution.

Learned counsel for the respondent, on the other hand, contended that there was no distinction between an amending Act and a new Act in the matter of application of Art. 254 of the Constitution, as in either case the provisions of the said Acts would be inconsistent with the existing law.

He further argued that the Amending Ac.ts introduced new principles of taxation and, therefore, fell squarely within the scope of entry 35 of the Concurrsat List.

As we are holding in favour of the appellant on the secont!l point, it is not necessary to express our view on the first.

The short question, therefore, is whether any of the provisi<il11s of the Amending Acts is repugnant to any of the provisions of lie

existing law with respect to any of the matters enumerated in the Concurrent List. Under the existing law, i.e., Act 9 of 1936, no motor vehicle could be used in the Assam Province unless tlte owner thereof had paid in respect of it a tax at the appropriate rate specified in the Schedule to the Act and, save as therein specified, such tax should thereafter be payable annually notwithstanding that the motor vehicle might from time to time cease to be used (see s. 4). As aforesaid, the Schedule annexed to tlie Principal Act was am.nded from time to time by different ameuing Acts and the rate was increased. Under the 1963 amendimg Act, apart from other provisions which do not relate to any principles of taxation, a new Schedule has been substitute<!. Neither the amending Act nor the Schedule laid down any principles of taxation in re$pect of motor vehicles. So too, the amending Act of 1966 substituted the Schedule of the Ac, t by another Schedule.

A persual of the aforesaid Schedule only disclose that. different

rates were fixed; that is to say, the amended Schedul.e does not lay down any principles on which taxes on motor vehicles are. to be levied within the meaning of entry 35 of the Concurrent List; it is solely concerned with taxes on vehicles within the meaning of entry 57 of List II. The two entries deal with two different matters though. allied ones----one deals w1th taxes on vehicles !"Id the other with the principles on which such taxes are to be lev1e_d.

When two entries in the Constitution, whether in the same List or different Lists, deal with two subjects, if possible, an attempt

shall be made to harmonize them rather than to bring them into conflict.

Tax.s on vehicles in their ordinary meaning connote the liability to pay taxes at the rates at which the taxes are to be levied.

On the other hand, the expression "principles of taxation" denotes rules of guidance in the matter of taxation.

We, therefore, hold that the Amending Acts do not come into conflict with the existing law in respect of any principles of taxation, but only deal with a subject-matter which is exclusively within the legislative competence of the State Legislature. In this view, there is no scope for the application of Art. 254 of the Constitution.

Even so, learned counsel for the respondent contended that the amending Acts offend the provisions of Art. 301 of the Constitution. Article 30 I reads :

"Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." The scope of this Article has been authoritatively defined by this

Court in The Automobile Tr11msport (Rajasthan) Ltd. v. The Stare of Rajasthan (1).

There the majority held that regulatory 1111easures or measures imposing compensatory taxes for the use

of trading facilities did not hamper trade, commerce or inter-

€Ourse but rather facilitate them, and, therefore, were not hit by the freedom declared by Art. 30 I. There, by virtue of section 4 of the Rajasthan Motor Vehicles Taxation Act, 1951, read with the Schedules, no one could use or keep a motor vehicle in Rajasthan without paying an appropriate tax for t and, if he did so, he was made liable to the penalties imposed under s. 11 of that Act. This Court by majority held that such taxes were compensatory and regulatory taxes which did not hinder the freedom of trade. In the present case the respondent in her petition questioned the validity of the provisions of the amending Acts on the following grounds :-(i) The Act abolished the permi• fee previously payable on such motor vehicles. She alleges that as a result of the rationalisation of tax and the introduction of a single point levy, the tax fixed irrespective of road condition. distance travelled, region catered for imposes crushing burden on the petitioner and the other stage carriage pennit-holders plying their vehicles in the short distance route and gives discriminatory weightage in favour o~ the State Carriage; Inter-State public carriers and other vehicles plying in longer distance routes. It will be seen tha, t the averments are general and vague. On the other hand, the State has filCll a detailed affidavit.

The following figures show the expenditure incurred on new roads and maintenance of old roads and the income from motor vehicles for

(I) [1963) t S.C.R. 491.

- some years.

In 1962-63 the expenditure was Rs. 671.60 lakhs and the income was Rs. 75.58 lakhs.

In 1965-66 the expendture was Rs. 1499.77 lakhs and the income was Rs. 137.96 lakhs.

From the said figures it is clear that the State is charging from the users of motor vehicles some thin$ in the neighbourhood of 11 % and 10% respectively for the said two years of the cos.t it has to incur in maintaining and making roads. From Annexure D to the said affidavit it appears that in some cases tax under the 1963 Act had been increased by 50% under the 1966 Act and in some cases the tax under 1963 Act bas been increased by 40% under 1966 Act. It is obvious that comparatively small proportion of the general expenditure is realised through the im.imgned taxation. In the circumstances, we must hold that the said Acts were only_ regulatory measures in1posing compensatory taxes for facilitating trade, commerce and intercourse.

The Acts are, therefore, not hit by Art. 301 of the Constitution.

In the result the order of the High Court is set aside and the appeal is allowed.

The petition filed by the respondent in the

High Court is dismissed with costs here and iii the court below.

V.P.S.

Appeal allowed.