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PETITIONER: K.M. CHIKKAPUTTASWAMY ETC.

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH AND ORS.

DATE OF JUDGMENT23/04/1985

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SEN, A.P. (J)

CITATION:  1985 AIR  956            1985 SCR  (3) 890  1985 SCC  (3) 387        1985 SCALE  (1)1186

ACT:      Andhra Pradesh  Motor Vehicles  Taxation Act. 1963 s. 9 (1)-Inter State  Bus Permits-Exemption  from payment of tax- Withdrawal  without   issuing  notification   under  section 9(1)(b)- Whether valid.      Motor   Vehicles    Act   1939   S.   63(3)-Inter-state agreements-Tax exemption-Withdrawn  on the recommendation of Home Secretaries  of two  States-Whether  recommendatory  in nature-Acceptance by State Government-if necessary.

HEADNOTE:      The appellants  were operating  stage carriage services on inter-State  routes between  the  States  of  Mysore  and Andhra Pradesh  The procedure envisaged counter-signature of permits in  pursuance to  the inter-State agreements entered into by  the two States under s.63 (3) of the Motor Vehicles Act, 1939.  On March  27,  1963  the  Government  of  Andhra Pradesh issued  a notification  under s. 9 (1) of the Andhra Pradesh Motor Vehicles laxation Act, 1963 exempting from the payment of  tax  under  the  said  Act  of  stage  carriages registered in  the State  of Mysore  and operating on routes which lie  in both  the State  of Mysore and Andhra Pradesh. The appellants satisfied the conditions envisaged in the  notification  and  were  exempted  from  payment  of  Motor Vehicle tax.      On January  25, 1968  the State of Mysore published and approved a scheme under s. 68 of the Motor Vehicles Act. the scheme authorised  the State  Transport Undertaking  in  the State  of  Mysore  to  operate  exclusively  stage  carriage services on  certain routes  and the  said scheme  came into force with effect from January 1, 1969. The scheme envisaged that the  existing permit  holders on the inter-State routes could continue to operate on such inter-State routes subject to the  condition  that  their  permits  would  be  rendered ineffective on  the over-lapping  portions of  the  notified routes which  lay within  the State  of  Mysore.  After  the scheme  came   into  force   the  question   of  renewal  of countersignatures of certain stage carriages permits came up for consideration and the authorities in the State of Mysore declined to countersign the stage carriage 891 permits. Consequently  the operators  in the State of Andhra

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Pradesh could  not continue to operate their services on the notified routes.  On their  representations a meeting of the Home Secretaries  of the  two States was held on November 7, 1969 and  it was  resolved that  notwithstanding the  inter- State Agreements,  the ten  routes which  included the three routes on  which the  appellants were  operating  the  stage carriage services  should be deleted from the purview of the inter-State Agreements  and that  the Mysore State operators who were  operating the services on inter-State routes would have to  pay tax for plying the motor vehicles in the Andhra Pradesh from the quarter commencing from January 1, 1970.      No notification  was, however, issued under s. 9 (1) of the Act  cancelling the  exemptions which  had been  granted earlier  in   respect  of  the  motor  vehicles  which  were operating on  the inter-State  routes  including  the  motor vehicles of the appellants.      A demand  was made  by the  officers in  the  State  of Andhra Pradesh  asking the  appellants to  pay tax under the Act with effect from January 1, 1970.      Being  aggrieved   by  the   notices  of   demand,  the appellants filed Writ Petition under Article 226 questioning the validity  of  the  notices  of  demand  issued  to  them contending (i)  that in the absence of a notification issued under Section  9 (1)  (b) of  the Act revoking the exemption which had been granted earlier, it was not open to the State of Andhra  Pradesh or  any of the officers functioning under the Act  to demand  payment of  motor vehicles tax under the Act in  respect of  their  motor  vehicles,  (ii)  that  the impugned notices  of the  demand issued  by the  authorities calling for  payment of  motor vehicles tax with effect from January 1.  1970 were  invalid and  unenforceable and  (iii) that since  the appellants  had spent large sums of money on the business  of running  the stage carriage services on the routes in  question, it was not open to the, State of Andhra Pradesh to withdraw the said concession unilaterally.      The High  Court rejected  the contentions and dismissed the Writ Petition holding that since it was not necessary to issue a  notification under  s.  9  ,(1)  for  granting  the exemption from  payment of tax payable under the Act, it was also not necessary to issue a notification under s. 9 (1) of the Act  for withdrawing  the exemption  already granted and normally the  demand made was sufficient to reimpose the tax payable under the Act. G      Allowing  the  appeals  on  the  question  whether  the exemption granted  by the  Government of Andhra Pradesh from payment of  tax by  a notification  dated  March  27,  1963. issued under  s. 9  (1) of the Andhra Pradesh Motor Vehicles Taxation Act  1963 in  respect of motor vehicles operated on certain inter-State  routes came  to an end with effect from January 1, 1970, the Court, 892 ^      HELD: (1)  The appellants  were entitled  to claim  the exemption from  payment of  tax granted  by the notification issued under s. 9 (1) of the Act during the relevant period. The judgment of the High Court in so far as it held that the appellants were  not entitled to the exemption is set aside. The impugned  notices of the demand are quashed. [904H; 905A B]      (2) Section  9 of  the Act provided that the Government may by notification grant an exemption of the tax payable by any person  or class  of persons  and lt  may cancel or vary such exempting, reduction or other modification. [899D-E] (      (3) The  expression ’notification’  is defined  in s. 2 (d) of  the Act  as a  notification published  in the Andhra

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Pradesh Gazette. [892E]      (4) Once a notification is issued under s. 3 in respect of any  motor  vehicle,  the  tax  becomes  payable  by  the registered owner  of the  motor vehicle  or any other person having possession  or control  thereof. Such a person can be exempted from  payment of  tax only  by notification  issued under s.  9 (1)  of the Act.A notification issued under s. 9 being a statutory instrument can be cancelled or modified in the manner  prescribed by  the Act  and in  no other    way. [899F-G]      (5) The  State  Government  can  grant  exemption  from payment of  tax or cancel the exemption already granted only in accordance  with  s.  9  (1).  That  is  the  legislative mandate. [90OA-B]      (6) In  the instant case, no notification was issued as provided by Cl. (b) of s. 9 (l) of the Act either cancelling or withdrawing  or varying  the exemption granted earlier by the notification issued under s. 9 (1). [900B]      (7) The agreement arrived at by the Home Secretaries on November 7, 1969 could not be considered as equivalent to an agreement entered  into between  the two  States, unless and until both  the Governments  agreed to give effect to it and it  was  not  effective  on  its  own  force-  It  was  only recommendatory in character. (901B.C]      (8) A  notification published  in  the  Andhra  Pradesh Gazette dated March 24th, 1971 under s. 63 (3A) of the Motor Vehicles Act  1939 indicated  that the  Government of Andhra Pradesh had  not taken  a  firm  decision  on  the  question whether the  routes in  question should  be de-recognised or excluded from  the purview of the inter-State Agreements. By the said notification the State Government of Andhra Pradesh invited objections  from persons  who were  effected to make their representations. This notification was cancelled and a second notification  was issued  on June  22, 1972  and this notification was  also cancelled  and a  third  notification containing similar  proposals was  issued on  September  10, 1973. It clearly indicated that at no material point of time the routes in question had ceased to be recognised by either of the States. The 893 contention that  the motor  vehicles in  question  were  not within the purview of the notification issued under s. 9 (1) of the  Act with  effect from  January  1,  1970  cannot  be accepted. [901D-H: 902A-H: 903A-G]      (9) It  was possible  that the  two States  could  have entered into  inter State  Agreement before  March  2,  1970 without following  the elaborate  procedure prescribed under sub-s. (3A)  of s.  63 of  the Motor  Vehicles Act 1939. The resolutions adopted  at the meeting of Home Secretaries were not effected  by both  the State  Governments and  the order passed by  the Government  of Andhra Pradesh on December 29, 1969 unilaterally merely directed the Commissioner of Andhra Pradesh to  takes further  action. It is, however, not shown that before  the said  date when  sub-s. 3  (A) of the s. 63 came into  force any inter State Agreement concluded by both the State  Governments on  the aforesaid lines had come into existence. [904C-F]

JUDGMENT:  CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos,  477 478 & 479 Of 1971.      From the  Judgment and  Order dated 28. 12. 1970 of the Andhra Pradsh  High Court  in Writ Petition No. 232, 233 and

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234 of 1970.      B. R.  L. Iyengar,  S.S. Javali,  Attar Singh and G. N. Rao for the Appellants.      T. V.S.N. Chari for the Respondent.      The Judgment of the Court was delivered. by      VENKATARAMIAM, J.  The short  question which arises for consideration in these appeals by certificate is whether the exemption granted  by the  Government of Andhra Pradesh from payment of tax by a notification dated March 27, 1963 issued under section  9(1) of  the Andhra  Pradesh  Motor  Vehicles Taxation Act, 1963 (Act No. 5 of 1963) (hereinafter referred to as  ’the Act’)  in respect of the motor vehicles operated by the  appellants on  certain inter-State routes came to an end with effect from January 1,1970.      The brief  facts which  have led  to these  appeals are these. The  appellant in  Civil Appeal  No. 477  of 1971 was operating a  stage carriage service from the year 1965 under a  permit  granted  by  the  Regional  Transport  Authority, Bangalore between  Bangalore in  the State  of  Mysore  (now called the  State of Karnataka) and Hindupur in the State of Andhra Pradesh.  The said permit had been duly countersigned by the concerned Transport Authority in the State of 894 Andhra Pradesh.  The appellant  in Civil  Appeal No.  478 of 1971  was   operating  a   stage  carriage  service  between Bangalore in  the State of Mysore and Kadiri in the State of Andhra Pradesh from 1963 by virtue of a permit issued by the Regional Transport Authority Ban galore and countersigned by the concerned  Transport Authority  in the  State of  Andhra Pradesh. Similarly,  the appellant in Civil Appeal U No. 479 of 1971  was operating  the stage  carriage service  between Tumkur in  the State of Mysore and Tirupathi in the State of Andhra  Pradesh  under  a  permit  issued  by  the  Regional Transport  Authority,   Tumkur  and   countersigned  by  the appropriate Transport  Authority  in  the  State  of  Andhra Pradesh.  The  counter  signatures  of  the  three  permits, referred to  above, had been done pursuant to certain Inter- State agreements  entered into  between the  State of Mysore and the  State of  Andhra Pradesh under section 63(3) of the Motor Vehicles  Act, 1939.  On March 27, 1963 the Government of Andhra  Pradesh had  issued a  notification under section 9(1) of  the  Act,  the  relevant  part  of  which  read  as follows:-      "In exercise of the powers conferred by sub-section (1)      of section  9 of  the  Andhra  Pradesh  Motor  Vehicles      Taxation Act,  1963 (Andhra Pradesh Act S of 1963), the      Governor of  Andhra Pradesh hereby exempts from payment      of the  tax leviable  under the  said  Act,  all  stage      carriages, contract  carriages,  public  carriers,  and      private carriers, registered in the State of Mysore and      operating on  a route  which lies in both the States of      Mysore and Andhra Pradesh.          Provided that:-           i)   the route is recognised by both the States to      be such a route:           ii)  every such  motor  vehicle  is  operating  in      accordance with the conditions of a permit granted as a      result of  an agreement  arrived  at  between  the  two      States,           iii) the tax  leviable in  respect of  every  such      motor vehicle  under any  law for the time being in the      State of Mysore has been paid in full in that state"      Since  the   motor  vehicles  used  by  the  appellants satisfied the conditions mentioned in the above notification they came to be

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895 exempted from  payment of  the motor  vehicles tax under the Act.      On January  25, 1968  the Government  of the  State  of Mysore published  an approved  scheme under  section 68-D of the Motor  Vehicles Act,  1939 which  was popularly known as the  ’Kolar   Scheme’  authorising   the   State   Transport Undertaking in  the State  of Mysore  to operate exclusively state carriage  services on  certain  routes  and  the  said scheme came  into force with effect from January 1,1969. The said scheme provided that the State Transport Undertaking of the State  of Mysore  would operate  its services on all the routes covered  by the said scheme to the complete exclusion of other persons. It however stated that the existing permit holders on  the inter-State routes could continue to operate on such  inter-State routes  subject to  the condition  that their  permits   would  be   rendered  ineffective   on  the overlapping portions of the notified routes which lay within the State of Mysore. The routes on which the appellants were running their stage carriage services being such inter-State routes the  were also  required  to  comply  with  the  said condition. After  the above scheme came into force, when the question of  renewal of counter- signatures of certain stage carriage permits  issued in  favour of  certain operators in the  State  of  Andhra  Pradesh  who  were  operating  stage carriage services  from a  place  in  the  State  of  Andhra Pradesh to  a place  in the  State of  Mysore  came  up  for consideration  before   the  concerned   Regional  Transport Authorities in  the  State  of  Mysore,  the  said  Regional Transport  Authorities  declined  to  countersign  the  said permits. Consequently,  the Andhra  Pradesh operators  could not continue  to operate  their  services  on  the  notified routes. On  the  representation  made  by  the  said  Andhra Pradesh operators  a meeting  of the Home Secretaries of the two States  was held  on November  7, 1969  to consider  the questions  arising  out  of  the  refusal  of  the  Regional Transport Authorities  in the State of Mysore to countersign the permits  issued by the authorities in the Andhra Pradesh State  and   the  imposition  of  the  restrictions  OD  the operators on  inter-State routes whose permits were still in force by  the scheme  which prohibited  the  picking  up  or setting down  of passengers  on the  overlapping portions of the notified  routes in the State of Mysore. At that meeting it was  resolved interalia  that notwithstanding  the inter- State agreements, the ten routes mentioned in the resolution which included the three routes on which the appellants were operating their  stage carriage  services should  be deleted from the purview of the inter-State agreements and that the 896 Mysore operators  who were  operating their  services on the said inter-State  routes would  have to  pay tax  for plying their motor  vehicles in  the Andhra Pradesh limits from the quarter commencing  from January  1, 1970.  It  was  further resolved that  the existing  permits issued  by the Regional Transport Authorities in the State of Mysore, when they came up for  renewal would  not be  countersigned by  the  Andhra Pradesh State  Austerities and  that the  said permits would cease to  be in  force after  the expiry  of the  period for which  they  had  been  issued.  On  receipt  of  the  above recommendations made by the Home Secretaries, the Government of Andhra  Pradesh passed an order on December 29, 1969, the relevant part of which read as follows:-      "ORDER:           The  Government   hereby  ratify  the  conclusions      arrived  at  the  meeting  held  at  Hyderabad  on  7th

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    November,  1969  between  the  representatives  of  the      Governments of  Mysore and  Andhra Pradesh in regard to      the operation  of road  transport  services  on  inter.      State routes between the two States as appended to this      order.           2. The Transport Commissioner is requested to take      necessary  further  action  in  consultation  with  the      Transport  Commissioner,   Mysore  and  report  to  the      Government. the action taken".      No notification was, however, issued under section 9(1) of the  Act cancelling  the exemption which had been granted earlier  in   respect  of  the  motor  vehicles  which  were operating on  certain inter State routes including the motor vehicles of  the appellants demand was, however, made by the concerned officers in the State of Andhra Pradesh asking the appellants to pay tax under the Act with effect from January 1,1970.  Aggrieved  by  the  said  notices  of  demand,  the appellants filed  writ petitions  under Article  226 of  the Constitution on the file of the High Court of Andhra Pradesh questioning the  validity of the notices of demand issued to them. Some  OF the  operators in  Andhra Pradesh,  who  were affected by the scheme published by the State of Mysore also filed writ petitions on the file of the High Court of Andhra Pradesh questioning the validity 897 Of the  scheme on  various grounds  with which  we  are  not concerned  in   these  cases.   Those  writ  petitions  were dismissed by  the learned  Single Judge of the High Court of Andhra  Pradesh.  The  Andhra  Pradesh  operators  who  were aggrieved by  the  judgment  of  the  learned  Single  Judge preferred writ  appeals before  the Division  Bench of  that High Court.  Those writ appeals and the writ petitions filed by the  appellants and  some others  were  all  heard  by  a Division Bench  of the  High Court and were disposed of by a common judgment  on December  28, 1970.  We are concerned in these cases  only with  the  writ  petitions  filed  by  the appellants.  The   main  ground   urged  on  behalf  of  the appellants in  their writ  petitions was that in the absence of a  notification issued  under section 9(1) (b) of the Act revoking the  exemption which  had been  granted earlier, it was not  open to  the State  of Andhra Pradesh or any of its officers functioning  under the  Act to  demand  payment  of motor vehicles  tax under  the Act in respect of their motor vehicles. The  Division Bench  of the  High Court  held that since it  was not  necessary to  issue a  notification under section 9(1)  for granting the exemption from payment of tax payable under  the Act, it was also not necessary to issue a notification under  section 9(1)  of the Act for withdrawing the  exemption  already  granted  under  the  Act  and  that therefore the  demand made  by  the  concerned  officer  was sufficient to  reimpose the tax payable under the Act on the appellants. The  High Court  accordingly, dismissed the writ petitions filed  by the  appellants and  on the applications made by  the appellants issued certificates of fitness under Article 133(1),(b)  of the  Constitution to  prefer  appeals before this  Court. These  appeals are filed on the basis of the said certificates.      The appellants  urged before the High Court two grounds in support  of their contention that the impugned notices of demand issued  by the authorities under the Act calling upon them to  pay motor  vehicle tax  with effect from January 1, 1970 were  invalid and  unenforceable: (i)  that  the  State Government,  having  granted  exemption  by  a  notification issued under  section 9 (1) of the - Act, could not withdraw or revoke the exemption without issuing a notification under

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section 9  (1) (b)  of the  Act; and  (ii)  that  since  the appellants had  spent large  sums on the business of running the stage carriage services on the routes in question on the basis of  the representation  made by  the State  of  Andhra Pradesh that  it would not levy tax under the Act in respect of those vehicles, it 898 was not  open to the State of Andhra Pradesh to withdraw the said concession  unilaterally. The  High Court rejected both these contentions.  On the  first contention, the High Court observed thus:           "Even so,  it was  pointed out  on behalf  of  the      petitioners that  the  tax  concession  was  originally      given by  a notification and there was no withdrawal of      such  concession   by  another   notification.  When  a      concession was  given by a notification, it was argued,      it could be withdrawn only by another notification. The      learned counsel  appearing for  the Governments frankly      admitted  that   there   was   no   such   notification      withdrawing the  concession, though the State of Andhra      Pradesh issued  a  memo  dated  15.1.1970  to  all  the      Regional Transport Authorities informing them about the      withdrawal of the concession. The important question of      the matter  is, however,  whether the concession had to      be withdrawn under a notification alone. What should be      really  examined   is  whether   the  granting  of  the      concession itself  was required  by law to be done only      by a  notification. Learned counsel for the petitioners      altogether failed  to bring  to  our  notice  any  such      requirement of  law.  They  could  not  point  out  any      statutory provision  or  rule  which  required  that  a      concession of  this nature  could be given only under a      notification. Simply  because the  Government of Andhra      Pradesh thought  it necessary  to issue  a notification      giving the  permit holders  tax concession though there      was no  legal requirement  to issue  a notification for      that l;’ purpose, it does not follow that withdrawal of      the concession  should also be by a notification. Thus,      the argument  based on  the absence  of a  notification      withdrawing the  tax concession  appears to  us  wholly      untenable."      It is  unfortunate that  the High  Court while deciding the  above   question  overlooked  the  relevant  provisions contained in  Section 9  of the  Act. Section  9 of  the Act reads thus:      "9.(1)    The Government may, by notification.           (a)  grant an exemption, make a reduction in the 899      rate or  order  other  modification  not  involving  an      enhancement in the rate, of the tax payable-                (i) by any person or class of persons, or           (ii) in respect  of any  motor vehicle or class of      motor  vehicles   or  motor  vehicles  running  in  any      particular area; and           (b)  cancel or  vary such  exemption, reduction or           other modification.                (2) Any notification issued under sub-section                (1) shall be laid, as soon as may be after it                is issued,  on the  table of  the Legislative                Assembly of  the State while it is in session                for a total period of fourteen days which may                be  comprised   in  one  session  or  in  two                successive sessions." (underlining by us)      Section 9  of the  Act provides that the Government may by notification grant an exemption of the tax payable by any

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person or  class of  persons and  it may cancel or vary such exemption, reduction or other modification. Any notification issued under  subsection (I)  of section 9 of the Act either granting any  exemption or  cancelling it  is required to be laid, as  soon as may be after it is issued, on the table of the  Legislative  Assembly  of  the  State.  The  expression ’notification’ is  defined by  section 2 (d) of the Act as a notification published  in the  Andhra Pradesh  Gazette. The State Government  by section  3 of  the Act is authorised to levy by  issuing a  notification tax  on every motor vehicle used or  kept for use in a  public place in the State Andhra Pradesh. When  once a notification is issued under section 3 of the  Act in respect of any motor vehicle. the tax becomes payable by  the registered owner of the motor vehicle or any other person  having possession  or control  there of.  Such person can be exempted from the payment of the tax so levied only by  a notification  issued under  section 9  (1) of the Act.A notification  issued under section 9 being a statutory instrument can  be  cancelled  or  modified  in  the  manner prescribed by the Act and in no other way. It is significant that any  notification issued  under section 9(1) of the Act either granting  exemption or  cancelling  or  varying  such exemption has got to be placed on the table of the Legisla 900 tive Assembly.  Both the notification issued under section 3 of the  Act and  the notification issued under section 9 (1) thereof fall  within the  meaning  of  the  expression  law’ referred to  in Article  265 of  the Constitution. The State Government can grant exemption from payment of tax or cancel an exemption already granted only in accordance with section 9 (1)  of the  Act. That  is the legislative mandate. In the instant  case,  admittedly  no  notification  is  issued  as provided by  clause (b)  of section  9 (1) of the Act either cancelling or  withdrawing or  varying the exemption granted earlier by  the notification issued under section 9 (1). The High Court erred in holding that the learned counsel for the appellants had  not drawn  its attention  to  any  statutory provision or  rule which  provided that a concession of this nature could  be given  only  under  a  notification.A  mere perusal of  the provisions of section 9 and the notification which is  issued thereunder,  would have  made it very clear that no  exemption from the payment of the tax due under the Act could  be granted exempt by the issue of a notification. It is  hazardous to depend on one’ memory while construing a statutory  provision   and  this   case  serves  as  a  good illustration of  this statement. Having held that it was not necessary to issue a notification for granting an exemption, the High Court misled itself into thinking that the issue of a notification for the purpose of withdrawing the concession already granted  was also  unnecessary. The  reason given by the  High   Court  for  rejecting  this  contention  of  the appellants is, therefor wholly untenable.      Having realist  the weakness of the ground on which the High Court  had rejected the contention of the appellants in this regard,  the learned  counsel for  the State Government raised a  new ground  before us  in  order  to  sustain  the impugned notices  of demand  He contended that the exemption from payment  of the  tax leviable  under the  Act could  be claimed by  the appellants  only so  long as  the routes  on which they were operating their stage carriages continued to be recognised  by both  the States to be such routes, and in support of  this contention he relied upon clause (i) of the proviso to the notification dated March 27, 1963 under which exemption had  been granted.  He argued  that since  at  the meeting of  the Home Secretaries held on November 7, 1969 it

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had been  agreed that the vehicles which were being operated by the  Mysore operators  would have  to pay  the tax to the State of  Andhra Pradesh  with effect  from January 1, 1910, the notification granting exemption 901 became inapplicable  to the motor vehicles of the appellants with  effect   from  the  said  date.  In  other  words  the contention urged  on behalf  of the  State of Andhra Pradesh was that since the motor vehicles operated by the appellants ceased to  answer the  description of  the motor vehicles to which the  notification granting  exemption  applied,  these appellants could  not claim  the benefit  of  it.  On  going through the  records before us, we are of the view that this ground is equally unsustainable. The agreement arrived at by the Home  Secretaries on  November 7,  1969,  could  not  be considered  as  equivalent  to  an  agreement  entered  into between  the   two  States,   unless  and   until  both  the Governments  agreed  to  give  effect  to  it.  It  was  not effective on  its own  force. It was  only recommendatory in character. It is no doubt true that on December 29, 1969 the Government of  Andhra Pradesh  issued an  order unilaterally stating that  it had  ratified the conclusions arrived at by the Home  Secretaries at  the meeting of November 7, 1969 in regard to the operation of road transport services on inter- State routes  between the two States, but it is seen that by the very order the Government of Andhra Pradesh directed the Transport Commissioner  Andhra  Pradesh  to  take  necessary further  action   in   consultation   with   the   Transport Commissioner, Mysore  and to  report to  the Government  the action  taken  by  him.  It  is  seen  from  a  notification published by  the Government of Andhra Pradesh in the Andhra Pradesh Gazette  Part I  Extraordinary dated  May  24,  1971 under section  63 (3-A) of the Motor Vehicles Act, 1939 that the Government  of Andhra  Pradesh had not till then taken a firm decision on the question whether the routes in question should be  de-recognised or  excluded from  the  purview  of inter-State  agreements.   The   relevant   part   of   that notification reads thus:-           "DRAFT AGREEMENT BETWEEN ANDHRA PRADESH AND MYSORE      STATES RE: TRANSPORT BY  MOTOR  VEHICLES.      (G. O. Rt. No. 1189, Home (Transport I) Department, dt. 1st April, 1971)                         NOTIFICATION           At the  inter-State Conference  held  between  the      representatives of  the Governments  of Andhra  Pradesh      and Mysore States at Hyderabad on 7. 11. 1969 and 902      11. 5.  1970, and  at Bangalore  on 6/7.  7. 1970,  the      outstanding  issues   between  the   two  States  w  re      discussed and  it is  proposed to  enter into an inter-      State agreement between Andhra Pradesh and Mysore State      Governments on the fol lowing issues:-           Item No.  1 (a):-It  is  proposed  to  delete  the      undermentioned inter-State  routes from the inter-State      Agreement as  it is not possible for the Andhra Pradesh      State to  implement the  agreements due to the approved      schemes   of    the   Mysore   State   Road   Transport      Corporation:-           1. Tirupathi to Tumkur           2. Bellary to Manthralayam           3. Gorantla to Bangalore           4. Anantapur to T. B. Damsite           5. Hindupur to Bangalore.           6. Kadiri to Bangalore.      As a  result of  deletion  of  these  routes  from  the

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agreement  the   Andhra   Pradesh   authorities   will   not countersign the  permits issued by the Mysore Authorities on these routes  when they  come up  for  renewal  and  counter signatures issued  by both  the States  on these routes will lapse by efflux of time. The vehicles plying on these routes are not  entitled for  single point  taxation as a result of deletion of these routes from the agreement with effect from 1.1. 1970-----                     (Underlining by us)      From the  portion of  the notification extracted above, it is  seen that  even on  May  24,  1971  the  question  of deletion  of   the  routes  between  Tirupathi  and  Tumkur, Hindupur and  Bangalore and  Kadiri and  Bangalore, from the purview of  the inter-State agreement was still in the stage of a proposal. By the said notification the State Government of Andhra  Pradesh had  invited objections  from persons who were effected by it, to make their re- 903 presentations as  can be seen from the last part of the said notification which reads thus;-           "The  above   proposal  is  hereby  published  for      information of persons likely to be affected thereby as      required under  section 63  (3-A) of the Motor Vehicles      Act, 1939; and notice is hereby given that the proposal      will be taken into consideration after the expiry of 30      days from  the date  of its  publication in  the Andhra      Pradesh Gazette  (both days  inclusive)  and  that  any      objection or  suggestion which may be received from any      person with respect thereto, before the aforesaid time,      will be considered by the Government of Andhra Pradesh,      Objections and  suggestion should  be addressed  to the      Secretary to  Government of  Andhra Pradesh in the Home      Department, Hyderabad in duplicate."      The records  produced before  us further  disclose that the above  notification issued under section 63 (3-A) of the Motor  vehicles   Act,  1939  was  cancelled  and  a  second notification containing  fresh proposals  was issued on June 22, 1972 and that the said second notification was cancelled and a  third notification  containing similar  proposals was issued on  September 10, 1973. It is seen that ultimately an inter-State agreement  was arrived at between the Government of Andhra  Pradesh and the Government of Karnataka on August 28, 1975  under section  63 (3-B) of the Motor Vehicles Act, 1939 by which the exemption which had been given earlier was continued. It  is also  not disputed that the permits issued in favour  of the  appellants, having  been in the meanwhile countersigned when they came up for renewal by the concerned authorities in  the State of Andhra Pradesh were in force at the time  when the new inter-State agreement came into force and the  appellants were  eligible for  the benefit  of  the exemption agreed  upon by  the two States. It is, therefore, clear that  at no  material point  of  time  the  routes  in question had  ceased to  be  recognised  by  either  of  the States. Hence,  the submission  that the  motor vehicles  in question were  not within  the purview  of the  notification issued under  section 9  (1) of  the Act  with  effect  from January 1, 1970 cannot be accepted.      It was  next urged that sub-section (3-A) of section 63 of the 904 Motor  Vehicles   Act,  1939  which  prescribed  a  detailed procedure for  the  purpose  of  concluding  an  inter-State agreement was  introduced by way of an amendment with effect from March 2, 1970 by Act 56 of 1969 and before that date no such 1970  formality was  required  to  be  followed  before

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entering into any such agreement. It was enough that the two State Governments  mutually agreed  upon the  terms  of  the agreement for  purposes of the provsio to sub-section (3) of section 63 of the Motor Vehicles Act, 1963 as it stood then. In the  above situation  it was  urged that  the  resolution passed by  the Home  Secretaries on November 7, 1969 and the order passed by the Government of Andhra Pradesh on December 29, 1969  ratifying the  said resolutions were sufficient in the eye  of law  to treat the inter-State routes referred to therein as  having been  deleted from  the  purview  of  the earlier inter-state agreements. This argument does not carry the case of the Government of Andhra Pradesh any further. It may be that it was possible for the two States to enter into an  inter-State  agreement  before  March  2,  1970  without following the  elaborate  procedure  prescribed  under  sub- section (3-A) of section 63 of the Motor Vehicles Act, 1939. But as  already mentioned  the resolutions  adopted  at  the meeting of  the Home  Secretaries were  not effective unless they were  agreed upon by both the State Government later on and the  order passed by the Government of Andhra Pradesh on December 19, 1969 unilaterally merely directed the Transport Commissioner of  Andhra Pradesh to take further action after consulting  the  Transport  Commissioner  of  the  State  of Mysore. It  is not shown that before March 2, 1970 when sub- section (3-A)  of section 63 of the Motor Vehicles Act, 1939 came into  force any inter-State agreement concluded by both the State Governments on the lines of the  conclusions arrived  at by  the Home Secretaries had come into  existence. Hence  we do not find any substance in this contention too.      In view  of the  above, we do not consider it necessary to   into the  question whether  the  Government  of  Andhra Pradesh was  precluded by  the rule  of promissory  estoppel from issuing the impugned notices of demand.      After giving  our anxious  consideration to  the  whole case, we  are of  the view that the appellants were entitled to claim  the exemption  granted by  the notification issued under section 9 (1) of the 905 Act during  the relevant period. In the result, the judgment of the  High Court  insofar as  it held  that the appellants were not  entitled to  the exemption  from  payment  of  tax during the  relevant period,  is liable to be set aside. We, accordingly, set aside the judgment of the High Court to the above extent.  The impugned  notices of  demand are quashed. The Government of Andhra Pradesh is directed not to take any steps to recover the tax demanded by it from the appellants. The appeals  are accordingly  allowed. Having  regard to the circumstances of the case, we make no order as to costs, A. P. J.                                    Appeals allowed. 906