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PETITIONER: STATE OF ASSAM & ORS.

       Vs.

RESPONDENT: LABANYA PROBHA DEBI

DATE OF JUDGMENT: 11/04/1967

BENCH: RAO, K. SUBBA (CJ) BENCH: RAO, K. SUBBA (CJ) HIDAYATULLAH, M. BACHAWAT, R.S. SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1967 AIR 1575            1967 SCR  (3) 611  CITATOR INFO :  RF         1975 SC  17  (15)

ACT: Constitution  of India, 1950, Art. 301, Entry 57 of List  II and  Entry  35 of List III-Taxation of  motor  vehicles  and "Principles of taxation" of motor vehicles,  difference-Art. 301, scope of.

HEADNOTE: Under the Assam Motor Vehicles Taxation Act, 1936, no  motor vehicle could be used in the Assam Province unless the owner thereof had- paid in respect of it a tax at the  appropriate rate specified in the Schedule to the Act.  The Schedule was amended  from  time  to  time by  the  substitution  of  new Schedules  and  as a result of such amendments in  1963  and 1966, the tax on 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 Amending, Acts were made in respect  of the  matter  contained in Entry 35 of the  Concurrent  List, namely principles of taxation of motor vehicles, and, as the provisions of the Amending Acts were inconsistent with those of the existing law, namely, the 1936 Act, the Amending 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  &he rates at which the taxes are  to  be  levied, while, the expression "principles of taxation" denotes rules of guidance in the matter of taxation.  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 State List, which is exclusively within the  legislative competence  of the State Legislature; and as such. there  is no scope for invoking Art. 254. [615A-C] (ii) It  is  only a comparatively small  proportion  of  the

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general   expenditure   incurred  on  new  roads   and   the maintenance of the ,)Id roads that was realised through  the impugned  taxation.  Therefore, the Amending Acts  are  only regulatory  measures imposing compensatory taxes  for  faci- litating  trade,  commerce and intercourse.  The  Acts  are, hence, not hit by Art. 301 of the Constitution. [616C] The  Automobile Transport (Raiasthan) Ltd. v. The  State  of Rajasthan, [1963] 1 S.C.R. 491, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 38 of 1967. Appeal  from the judgment and order dated December 1,  1966, of  the Assam and Nagaland High Court in Civil Rule No.  145 of 1964. S.   V.  Gupte,  Solicitor-General and Naunit Lal,  for  the appellants. 612 Ram  Labhaya  Obhrai,  I. M. Obhrai, S.K. Mehta  and  K.  L. Mehta, for the respondent. 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 Act 9 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 1, 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 filing 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 petitioner respondent  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  the  assent  of  the President,  were  void under Art. 254 of  the  Constitution. This  conclusion  was  arrived at on  the  ground  that  the

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Amending  Acts were made in respect of the matter  contained in entry 35 of the Concurrent List.                             613 To appreciate the contentions it will be convenient to  read at the outset the relevant Articles of the Constitution. Entry 57 of List II of the Seventh Schedule to the Constitu- tion :               Taxes   on  vehicles,   whether   mechanically               propelled  or not, suitable for use on  roads,               including  tramcars subject to the  provisions               of entry 35 of List 111.               Entry 35 of List III               Mechanically propelled vehicles including  the               principles 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  with  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               shall,  if  it  has  been  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 of  the present appeal leads to the following  result.   The Principal  Act  was an existing law.  If the  Amending  Acts were made 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 he void.  But, on the other hand, if the Amending Acts were  passed  under  entry  57 of List  11  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 or the 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 614 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  part of it. (2) The amending Acts  were  only

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made  under entry 57 of List 11 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,  con- tended 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  Acts  introduced   new principles of taxation and, therefore, fell squarely  within the scope of entry 35 of the Concurrent List. As  we are holding in favour of the appellant on the  second point, it is not necessary to express our view on the first. The  short  question,  therefore,  is  whether  any  of  the provisions  of the Amending Acts is repugnant to any of  the provisions  of the 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 the 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  the Principal.   Act was amended from time to time by  different amending  Acts and the rate was increased.  Under  the  1963 amending  Act,  apart  from other provisions  which  do  not relate  to  any principles of taxation, a new  Schedule  has been substituted.  Neither the amending Act nor the Schedule laid  down  any principles of taxation in respect  of  motor vehicles.  So too, the amending Act ,of 1966 substituted the Schedule  of the Act by another Schedule.  A persual of  the aforesaid  Schedule only disclose that different rates  were fixed;  that is to say, the amended Schedule 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 entry 57 of List 11.  The two entries deal  With two  different  matters though allied  ones-one  deals  with taxes on vehicles and the other with the principles on which such  taxes  are  to be levied.  When  two  entries  in  the Constitution,  whether in the same List or different  Lists, deal with two subjects, if possible, an attempt 615 shall  be made to harmonize them rather than to  bring  them into conflict.  Taxes 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 301 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 Transport (Rajasthan)  Ltd. v. The State of Rajasthan(1).  There the majority held  that

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regulatory Measures or measures imposing compensatory  taxes for  the  use of trading facilities did  not  hamper  trade, commerce  or  interCourse but rather facilitate  them,  and, therefore, were not hit by the freedom declared by Art. 301. 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 it and, if he did so, be  was made  liable  to the penalties imposed under s. 11  of  that Act.  This Court by majority held that such taxes were  com- pensatory  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 permit 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  oil  the  petitioner and the  other  stage  carriage permit-bolders  plying their vehicles in the short  distance route  and gives discriminatory weightage in favour  of  the State  Carriage,  Inter-State  public  carriers  and   other vehicles plying in longer distance routes.  It will be  seen that  the  averments are general and vague.   On  the  other hand,  the  State  has  filed  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 (1)  [1963] 1 S.C.R.491. 616 some years.  In 1962-63 the expenditure was Rs. 671.60 lakhs and the income was Rs. 75.58 lakhs.  In 1965-66 the  expend- ture  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 thing in  the neighbourhood of II% and IO % respectively for the said  two years of the cost 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 has been increased by 40% under 1966 Act.   It  is obvious  that comparatively small proportion of the  general expenditure  is realised through the impugned taxation.   In the circumstances, we must hold that the said Acts were only regulatory   measures  imposing  _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  in  the court below. V.P.S.                                                Appeal allowed 617