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PETITIONER: AMRIT BANASPATI CO. LTD.

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT10/02/1995

BENCH: PARIPOORNAN, K.S.(J) BENCH: PARIPOORNAN, K.S.(J) VERMA, JAGDISH SARAN (J)

CITATION:  1995 AIR 1340            1995 SCC  (3) 335  JT 1995 (2)   359        1995 SCALE  (1)809

ACT:

HEADNOTE:

JUDGMENT: 1. The appellant, petitioner in Civil Writ Petition No.  144 of  1972, High Court of Delhi, has filed this appeal,  on  a certificate  granted by the High Court under Article  133(1) (a),  (b)  & (c) of the Constitution of India,  against  the Judgment of the High Court dated 15.9.1972. The appellant  - company has its registered office at Ghaziabad in the  State of Uttar Pradesh.  It carries on the business of manufactur- 361 ing  and  dealing in Vanaspati and its products.  It  has  a factory  at  Ghaziabad.   The products  are  carried  on  by railway  and/or by road into the Union Territory  of  Delhi. The Delhi Municipal Corporation Act, 1957 (Act 66 of  1957), hereinafter  referred  to  as  ’the  Act’,  was  enacted  by Parliament and it came into force on 28.10.1957. Section 178 of the said Act provides for the levy of terminal tax at the rates  specified  in the Tenth Schedule to the  Act  on  all goods carried by railway or road into the Union Territory of Delhi  from  any  place  outside  Delhi.   Under  the   said provision,  the Delhi terminal tax agency realised a sum  of Rs. 2,95,396.01 for the years 1969, 1970 & 1971 as  terminal tax  from  the petitioner on vanaspati products  carried  by railway  and/or  road  into the Union  Territory  of  Delhi. Alleging   that  section  178  of  the  Act   directly   and immediately impedes the movement of goods from one place  to another, restricts trade, commerce and intercourse and  also discriminates  between goods manufactured within  the  Union Territory  of Delhi and the goods manufactured  outside  the said  territory,  the  appellant  -  company  prayed  for  a declaration  that  section 178 of the Act is  ultravires  of Article  301  of  the Constitution of  India,  and  for  the issuance of a writ of prohibition or direction directing the respondents to forebear from realising any terminal tax from the petitioner, and for a refund of the aforesaid sum of Rs. 2,95,396.01 realised by the respondents as terminal tax from the petitioner.  The petitioner stated that the terminal tax

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chargeable  under  Section  178 was  not  referable  to  any service  rendered or to be rendered by any railway  or  road transport and was not protected by Articles 302, 303 and 304 of the Constitution of India.  It is alleged that the  peti- tioner   wrote   letters  on  18.11.1971   and   20.12.1971, requesting the respondents the Union of India and others, to refrain  from  levying and/or collecting  any  terminal  tax under  Section  178.   Since  there  was  no  response,  the appellant was constrained to file the writ petition and seek appropriate reliefs. 2.A Division Bench of the Delhi High Court by Judgment dated 15.9.1972,  held that the levy of tax under section  178  of the  Act is a direct and immediate restriction on trade  and offends Article 301 of the Constitution of India, It further held  that the levy is neither regulatory nor  compensatory. The  Division  Bench also held that the  said  provision  is saved  by Article 302 of the Constitution of India.   Though the  scope of Articles 303 and 305 was also  discussed,  the Court  did  not consider it necessary to express  any  final view on the various pleas raised in that behalf.  The  Court held that though section 178 of the Act contravened  Article 301,  it is saved by Article 302 and the writ  petition  was dismissed.    It  is  from  the  aforesaid  Judgment   dated 15.9.1972,  the  petitioner has filed this Civil  Appeal  by certificate granted by the High Court. 3.We heard counsel for the appellant Sri, S. Ganesh and also counsel  for the respondents Sri.  N. N.  Goswami.   Counsel for the appellant referred to the averments in paragraphs  3 and  7  of the writ petition and the reply  thereto  by  the respondents  in  paragraph 8 of its counter,  and  contended that  Section  178 of the Act  discriminates  between  goods manufactured  within  the Union Territory of Delhi  and  the goods  manufactured outside the said territory.   The  goods manufactured outside the said territory alone has to pay the terminal tax under the Act.  This, according to counsel 362 for  the  appellant, is an impediment on  the   movement  of goods from the State of Haryana into the Union Territory for Delhi  and  discrimination is writ large  in  the  aforesaid provision.   On the other hand, counsel for  the  respondent vehemently  contended  that apart from a vague  and  general plea  that  the appellant is placed in a position  of  great disadvantage as compared to other manufactures of  vanaspati in  Delhi,  there  is  no  proper  pleadings  and  proof  or particulars on that score.  It was also submitted that  even on  the hypothesis that section 178 of the  Act  contravenes Article 301 of the Constitution, it is saved by Article  302 and there is no infirmity as alleged. 4.   It is only appropriate to quote Section 178 of the  Act which is as follows:               178.  Terminal tax on goods carried by railway               or  road.  (1)  On and from the  date  of  the               establishment of the Corporation under section               3, there shall be levied on all goods  carried               by railway or road into the Union Territory of               Delhi  from  any  place  outside  thereof,   a               terminal  tax  at the rates specified  in  the               Tenth Schedule.                2. The Central Government may, by declaration               in  the  Official Gazette, vary from  time  to               time, the rates specified in that Schedule, in               relation to any goods or classes of goods  so,               however,  that where the rates are  increased,                             the  increased  rate  shall not  be  more  tha n

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             treble the rates so specified.               3.The    Central   Government   may   by    Re               notification  declare  that with  effect  from               such  date  as may be specified in  the  noti-               fication, the terminal tax levied in  relation               to  any  goods or class of  goods  shall,  for               reasons  specified in the notification,  cease               to be levied." The  said legislation is one enacted by Parliament.  Article 301 and 302 of the Constitution of India may also be quoted.               "301.  Subject to the other provisions of this               part,   trade,   commerce   and    intercourse               throughout  the  territory of India  shall  be               free.               "302.  parliament  may  by  law  impose   such               restrictions on the freedom of trade, commerce               or  intercourse between one State and  another               or  within any part of the territory of  India               as may be required in the public interest. 5.   We  may usefully refer to some basic principles  to  be borne in mind before evaluating the plea that section 178 of the  Act violates Article 301 of the Constitution  of  India and  is also discriminatory.  A Constitution Bench  of  this Court  in  VS. Rice and Oil Mills and others vs.   State  of Andhra  Pradesh etc. (AIR 1964 SC 1781), at p.  1788  stated thus:               "This  Court has repeatedly pointed  out  that               when a citizen wants to challenge the validity               of   any  statute  on  the  ground   that   it               contravenes  Art.  14,  specific,  clear   and               unambiguous  allegations must be made in  that               behalf and it must be shown that the  impugned               statute  is  based on  discrimination  is  not               referable  to  any  classification  which   is               rational  and which has nexus with the  object               intended to be achieved by the said statute." 6.   Again  in G.K Krishnan etc. v.State of Tamil  Nadu  and anr. etc. (AIR 1975 SC 583), at p. 592 in paragraph 36, this Court observed:               "...A  person who challenges a  classification               as unreasonable has the burden of proving  it.               There is always a presump-               363               tion that a classification is valid especially               in  a taxing statute. The ancient  proposition               that    a    person   who    challenges    the                             reasonableness   of   a   classification    an d               therefore   the constitutionally  of  the  law               making the classification, has been reiterated               by this Court recently." 7.  Still later a Constitution Bench of this Court  in  R.K. Garg v. Union of India ors. (AIR 1981 SC 2138), at pp.  2146 & 2147 in paragraph 7 & 8, stated the law as follows:               "Now  while  considering  the   constitutional               validity of a statute said to be violative  of               Article  14, it is necessary to bear  in  mind               certain  well  established  principles   which               have  been evolved by the Courts as  rules  of               guidance  in discharge of  its  constitutional               function of judicial review.  The  first  rule               is  that  there  is always  a  presumption  in               favour  of the constitutionality of a  statute               and the burden is upon  him who attacks it  to               show that there has been a clear transgression

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             of  the constitutional principles.  This  rule               is   based  on  the   assumption,   judicially               recognised and accepted, that the  legislature               understands  and  correctly  appreciates   the               needs  of  its  own  people.  its  laws    are               directed    to  problems  made   manifest   by               experience   and its discrimination  are  base               on   adequate  grounds.  The  presumption   of               constitutionality   is indeed so strong   that               in order to sustain it the Court may take into               consideration  matters   of  common  knowledge               matters  of common reports the history of  the               times  and  may assume every  state  of  facts               which can be conceived existing at the time of               legislation.               "Another rule of equal importance   is that  that               its  laws  relating  to  economic   activities               should  be viewed with greater  latitude  than               laws touching  civil rights  such as   freedom               of speech religion etc. It has been said by no               less  a   person  than  Holmes  J.,  that  the               legislature should be allowed some play in the               joints   because  it as to deal  with  complex               problems  which  do  not  admits  of  solution               through  any  doctrinaire or  straight  jacket               formula and this is particularly true  in case               of legislation dealing with economic  matters,               where,  having  regard to the  nature  of  the               problems  required to be dealt  with,  greater               play  in the joints has to be allowed  to  the               legislature.   The  Court  should  feel   more               inclined  to  give  judicial   deference    to               legislative  judgment in the field of economic               regulation   than   in  other   areas    where               fundamental human  rights  are involved. It  is  settled  law  that  the  allegations  regarding  the violation  of constitutional provision should  be  specific, clear    and   unambiguous   and   should   give    relevant particulars, and the burden is on the person  who  impeaches the  law as violative   of constitutional guarantee to  show that  the particular  provision  is infirm  for all or   any of  the  reasons stated  by him. In the recent  decision  of this Court  Gauri Shanker and  ors. v. Union  of India  ors. etc.  (1994  (6)  SCC  349),  to  which   both  of  us  were parties, it was reiterated that- (a)  there  is  always   a  presumtion  in  favour  of   the constitutionality  of an enactment  and the  burden is  upon him  who attacks it to show   that there  has been  a  clear transgression of the constitutional principles; (b) it must be presumed that the Legislature understands and correctly appreciates the need of its own people to problems made  manifest by experience    and that its discriminations are  based on adequate grounds ; (c) in order to sustain the presumption 364 of  constitutionality the Court may take into  consideration matters  of common knowledge, matters of common report,  the history  of  the times and may assume every state  of  facts which can be conceived existing at the time of legislation. 9. We scanned the entire pleadings in this case.  Tested  in the  light of the above principles, we are of  opinion  that there  is  no sufficient or specific or  definite  pleadings with  particulars,  to  state that section 178  of  the  Act violates Art. 301 of the Constitution or is  discriminatory. Moreover, on facts, the presumptions which are applicable in

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the  instant case as stated above, have not  been  rebutted. On  this short ground, the writ petition filed in  the  High Court by the appellant should fall. 10.  The   scope   and  content  of  Article  301   of   the Constitution  of  India has been laid  down  in  innumerable decisions of this Court beginning from Atiabari Tea Co. Ltd. v.   Me State of Assam & Anr.(AIR 1961 SC    232 = 1961  (1) SCR 809).  Suffice it to say that it is only when the intra- State or  inter-State  movement of the persons or goods  are impeded  directly and immediately as distinct from  creating some   indirect  or  inconsequential  impediment,   by   any legislative or executive action, infringement of the freedom envisaged by Article 301 can arise.  Without anything  more, a tax law, per se, may not impair the said freedom.  At  the same time, it should be stated that a fiscal measure is  not outside the purview of Article 301 of the Constitution.   It is  unnecessary to refer to all the decisions on the  point. We  shall  only refer to a few important decisions  of  this Court  on  this aspect-- Automobile Transport Lid.  etc.  v. State of Rajasthan & Ors. (AIR 1962 SC 1406), Andhra  Sugars Lid. & anr. vs. State of Andhra Pradesh and- Ors. (AIR  1968 SC  599), State of Madras vs.  N.K. Nataraja  Mudaliar  (AIR 1969  SC 147) and a recent decision which has  surveyed  the entire case law on the subject -M/s. Video Electronics  Pvt. Ltd. v. State of Punjab & anr. (AIR 1990 SC 820). 11.  Even  proceeding on the basis that section 178  of  the Act  directly immediately impedes the movement of the  goods (vanaspati)  from  the  State  of  Haryana  into  the  Union Territory  of Delhi, we are of the view that  the  statutory provision   aforesaid  is  saved  by  Article  302  of   the Constitution of India.  It is true that a tax may in certain cases, directly and immediately impede the movement of  flow of  trade,  but the imposition of a tax does not  do  so  in every case.  It depends upon the context and  circumstances. Shah, J., on behalf of the Constitution Bench, in the  State of Madras v. N.K Nataraja Mudaliar (AIR 1969 SC 1 47), at p. 1 5 5, stated thus:               "There  is also no doubt that exercise of  the               power to tax may normally be presumed to be in               the public interest 12.  In  this  case  the  impugned tax  law  is  enacted  by Parliament.   There is a presumption that the imposition  of the tax is in public interest.  That has not been offset  by any  contra material.  So viewed, section 178 of the Act  is saved  by Art. 302 of the Constitution of India.  It was  so held by the High Court and we concur with the said view.  In this connection it is only appropriate to quote what Mathew, J. observed on behalf of the bench in G.K Krishnan v.  State of Tamil Nadu (AIR 1975 SC 583),in paragraph 39:               "39.   Judicial  deference to  legislature  in               instances of economic regulation is               365               sometimes  explained  by  the  argument   that               rationality  of  a classification  may  depend               upon  ’local  conditions’  about  which  local               legislative  or administrative body  would  be               better  informed than a court.   Consequently,               lacking  the capacity to inform  itself  fully               about the peculiarities of a particular  local               situation, a court should hesitate to dub  the               legislative  classification  irrational   (see               Carmichael v. Southern Coal & Coak Co., (1936)               301 US 495) Tax Laws, for example, may respond               closely to local needs and court’s familiarity               with  these  needs is likely  to  be  limited.

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             Therefore, the Court must be aware of its  own               remoteness  and lack of familiarity  with  the               local  problems.  Classification is  dependent               on peculiar needs and specific difficulties of               the community, The needs and the  difficulties               of  a community are constituted out  of  facts               and  information  beyond the easy ken  of  the               court." The above perspective has been restated by the  Constitution Bench in R.K Garg v.     Union of India and Ors. (AIR 1981 SC   2138),  at  paragraph 2147,paragraph 8, which  we  have adverted to,in the earlier portion of this Judgment. 13.  There  is  no merit in this appeal.  It  is  dismissed. There shall be no order as to costs. 366