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TMI Blog1963 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the said Act was challenged by the petitioners and certain other producers of tea by filing writ petitions before the Assam High Court. The Assam High Court dismissed the writ petitions and held that the impugned Act of 1954 was valid. The said judgment was pronounced by the High Court on the 6th of June, 1955. The petitioners whose writ petitions had been dismissed, then preferred appeals to this Court by special leave, and they also, moved this Court by writ petitions under Art. 32 of the Constitution. These matters were heard by this Court in the case of Atiabari Tea Co. Ltd. [1061] 1 S.C.R. 809. and by its judgment delivered on the 26th September, 1960, the said impugned Act was struck down as being unconstitutional. Thereafter, the Act with which we are concerned in, 'the , present proceedings was passed by the Assam Assembly. It received the assent of the President on the 6th April, 1961. The relevant terms of the Act are, on the whole, substantially similar to the terms of the earlier Act which was struck down, The Act has made certain additional provisions to which we will refer later. The petitioners contend that the operative provisions of the Act are invalid, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of the said appeals were allowed to intervene in the present proceedings. In fact by arrangement between Mr. Mazumdar who appeared for the petitioners before us and Mr.pathak who represents the interveners, the principal argument has been urged before us by Mr. Pathak and we expressly told Mr. Pathak that since our decision on the present writ petition would govern the decision of the appeals which the respondent is going to bring to this Court against the decision of the Assam High Court, we would permit him to raise all points in support of the view taken by the Assam High Court and would not confine him to the points which have been taken by the petitioners in their petition before us. In fact, the Assam Judgments in question have been filed by the Interveners, and Mr. Pathak has invited our attention to the main findings recorded in those judgments. Normally, counsel for interveners is not allowed a right of reply, but having regard to the fact that Mr. Mazumdar requested us to allow Mr. Pathak to lead him in the present proceedings, we have allowed both Mr. Pathak and Mr. Mazumdar to open the case,, and have heard both of them in reply. 4. Petitioner No. 2's case is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. 5. These pleas are denied by the respondent and it is urged on its behalf that the Act is constitutional, that it has been passed under Art. 304(b) after obtaining the previous sanction of the President; that its material provisions are in no sense unreasonable and that the restrictions imposed by them on the freedom of trade are reasonable restrictions and are required in the 'public interest. It is also alleged that the said restrictions are reasonable and in the interests of the general public and as such, they are saved by clause (6) of Art. 19. 6. Before dealing with these contentions, it is necessary to indicate at the outset the effect of the two judgments to which we have already referred. In the case of the Atiabari Tea Co. Ltd. ([1961] 1 S.C.R. 809), three views were expressed. Sinha C.J., held that the freedom conferred by Art. 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse. According to his view, the earlier Assam Act did not contravene Art. 301 and was valid. This view put a somewhat narrow construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate judgment concurring with the conclusion reached by Das J., preferred to emphasise that taxing statutes which would escape the mischief of Art. 301 could be appropriately described as regulatory. He, therefore, held that the Rajasthan Motor Vehicles Taxation Act (No.11 of 1951) with which the Bench was dealing, was regulatory in character and as such, not unconstitutional. In other words, whereas Das, Kapur and Sarkar JJ., upheld the validity of the Act on the ground that it was either compensatory or regulatory, Subba Rao J., preferred to base his decision mainly on the ground that it was regulatory. 11. The minority view which has been expressed by Hidayatullah J., on behalf of himself and Ayyangar and Madholkar JJ., assumed that though regulatory taxing statutes may be said to fall outside Art.30,compensatory taxing statutes cannot make the same claim. According to this view, if a taxing statute was sought to be justified on the ground that the tax imposed by it was compensatory in character, that could be done only by adopting the procedure prescribed by Art. 304(b). It may be noticed that the scope of the regulatory statutes as discussed by Hidayatullah J., is much na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the State may seek, to justify the, Act on the ground that the restrictions imposed by it are reasonable and in the public interest, and in doing so, it may, for instance, rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan) ([1963] 1 S.C.R. 491) case, compensatory taxation would be outside Art. 301 and cannot therefore, fall under Art. 304(b). If in the present case it had been urged before us that the tax levied by the Act is compensatory in character, it would have been necessary to consider the question once again by constituting a larger Bench. It will be recalled that the Act with which we are concerned has been passed by the Assam Legislature directly as a result of the decision of this Court in Atiabari Tea Co.'s case([1961] 1 S.C.R 809.); that decision was that if the tax imposed by the Act was compensatory in character then the Act could be sustained only if it was passed after complying with the provisions of Art. 30-4(b). The Assam Legislature has accordingly adopted the said procedure and passed the Act. If the Act had been compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners, it is necessary to read it: "(1) Subject to the provisions of this Act, there shall be levied a tax on (a) manufactured tea and (b) jute in bales carried by motor vehicle, , cart, trolley, boat, animal and human agency or any other means except railways and airways in such manner and in respect of such period and at such rate as specified in the Schedule. (2) Such tax levied on manufactured tea shall be realised from the producer and that levied on jute shall be realised from the dealer; Provided that where tea is sold at the factory premises, the producer shall be liable for realisation of tax from the purchaser with effect from such date as the Government may, by notification, appoint, for the carriage of such tea as provided in this section and the producer shall be liable for the payment of such tax notwithstanding the fact that the tea is not carried by the producer; Provided further that no tax shall be levied under this Act on any jute or tea in respect of which such tax has already been paid." 16. Section 4 provides that the tax shall be charged on the total net weight carried during a return period. Section 5 deals with the problem of determining the we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act repealed, shall be deemed to have been made, incurred, levied, realised, furnished, commenced, published, taken or done under the corresponding provisions of this Act. (2) Notwithstanding anything contained in any judgment, decree or order of any court, all taxes imposed or realised or purporting to have been imposed or realised under the Act repealed shall for all purposes be deemed to be, and to have been, validly imposed or realised and accordingly- (a) no suit or other proceeding shall be maintained or continued in any court against the Government or any person or authority whatsoever for the refund of any taxes so paid; and (b) no court shall enforce any decree or order directing the refund of any taxes so paid." 17. The Schedule to the Act gives the rates for respective periods and these rates correspond to the rates prescribed by the earlier Act for the period covered by it and prescribes new rates for the period thereafter. Rules have been made under s. 32(1) and Forms prescribed for the making of returns. That, in brief, is the scheme of the Act. 18. It has been urged before us by Mr. Pathak that s. 3 which is the charging section, is outside the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is carried has been purchased by him before it leaves the garden. He wants us to read the proviso as creating an obligation on the purchaser to pay the tax and as making the producer liable to recover the tax from the purchaser as the Agent of the State. In support of his argument that s. 3(2) cannot be read to include cases where tea has been sold before it is carried, Mr. Setalvad has referred us to the fact that when the corresponding provision in the earlier Act was construed by the Assam High Court, it was held that where tea is sold before it is carried, the producer is not liable and no tax can be recovered from him, vide H. P. Barua v. State of Assam(1). He also emphasises the fact that the proviso is prospective in operation, and so, it indicates that it cannot lend colour to the construction of section 3(2). 20. It is, however, not easy to accept Mr. Setalvad's construction. The words used in the proviso show( that the producer has been made liable for realisation of the tax from the purchaser, but there are no words imposing a liability on the purchaser to pay the tax and no penalty is prescribed in case he fails to pay the tax to the producer. The relevant forms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it". This statement of the law must, however, be read subject to the condition that even tax statutes have to satisfy the test of reasonableness prescribed by clause (6) of Art. 19, and the fundamental right of equality before law guaranteed by Art. 14 as well as the test prescribed by Art. 301. 22. Reverting then to s. 3(1), we ought to add that the said section in terms expressly makes the carriage of goods the taxable event, and s. 3(2) makes the producer liable to pay the tax only on goods carried. If the goods produced in the tea garden are not carried, there is no occasion to pay the tax. That being so, the fact that the Legislature has adopted the machinery of making the producer responsible for the payment of the tax and liable for it in that sense cannot introduce any element of legislative incompetence which would vitiate the statute. 23. It may be conceded that when the legislature constructs a machinery for the recovery of the taxes which it is within its competence to impose, the said machinery should have some rational or intellig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collection for administrative convenience. While enunciating this principle, this Court, however, took the precaution of adding that "whether in a particular case the tax ceases to be in essence an excise duty and the rational connection between the duty and the person on whom it is imposed ceased to exist, is to be decided on a fair construction of the provisions of a particular Act". 26. In Sardar Baldel, Singh v. Commissioner of Income-tax, Delhi & Ajmer ([1961] 1 S.C.R. 482) , this Court was called upon to consider the validity of s. 23A of the Indian Income-tax Act, 1922. At the relevant time, the said section gave power to the appropriate authority to make an order that the undistributed portion of the assessable income of the company shall be deemed to have been distributed as dividends and provided that thereupon the proportionate share thereof of each shareholder shall be included in his income for assessment. The argument which was urged before this Court was that the Company and its shareholders are different persons and, therefore, s. 23A was invalid inasmuch as under entry 54 of List 1 a law could be passed imposing a tax on a person on his own income. This argument w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab Province v. Daulat Singh"'. In that case, the Privy Council had occasion to deal with s. 5 of the Pujab Alienation of Land Act (Indian Act XIII of 1900) considered in the light of the provisions of s. 298 of the Government of India Act, 1935. Section 298(2) provides that nothing in this section shall affect the operation of any law which (a) prohibits, either absolutely or subject' to exceptions, the sale or mortgage of agricultural land there- in described. The Privy Council held that s. 5 of the impugned Act which created such a prohibition could not operate retrospectively because the word " prohibits" can only mean the forbidding of a transaction, and such a direction is appropriate only in respect of transactions to take place subsequently to the date of the direction, and cannot include an attempt to reopen or set aside transactions already completed, or to vacate titles already acquired. It would thus be seen that this decision turned essentially upon the use of the word "prohibits" in s. 298(2) , and so, it would be unreasonable to extend the said decision to the cases falling under Art. 304(b) particularly when the restriction imposed is not of such a character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade guaranteed by Art. 301 is no doubt of very great importance to the political and economic unity of the country; but the freedom guaranteed to the individual is no less important; just as in the case of a challenge to the validity of a statute under Art. 19 the court has to consider whether the restrictions imposed by the statute are reasonable and in the interests of the general public, so in dealing with a challenge to the validity of a statute passed under Art. 304(b) the court has to consider whether the restrictions (1) [1963] 2 S.C.R.747 p.761. imposed by it are reasonable and are required in the public interest. The impact of the restrictions on the individual's right has to be judged in one case, whereas the impact of the restrictions on the freedom of trade has to be judged in the other; but basically, it is the invasion of a guaranteed right whose validity is being examined in either case; and so, if the law can be retrospective in one case, there is no reason why it cannot be retrospective in the other. We are, therefore, satisfied that there is no substance in the plea raised by Mr. Pathak that the Act is invalid solely because it operates retrospectively. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic interest. This position is not disputed by Mr. Setalvad before us. It is true that in the case of Atiabari Tea Co.(1), whilst contrasting the provisions of Art. 302 with those of Art. 304(b) the majority judgment has observed that prima facie the requirement of public interest may be said to have been satisfied by the previous sanction of the President and it is only the reasonableness of the restrictions which may fall to be considered in proceedings before the Court. However,, this point did not directly arise for the decision of the Court, and so, those observations should not be read as definitely expressing the opinion that the requirement of public interest does not become the subject-matter of ad- judication in proceedings before the Court when the validity of an Act passed under Art. 304(b) is questioned. 34. That takes us to the question about the onus of proof in these proceedings. It may be that in most cases, the question about the onus of proof would turn out to be merely of academic. importance, because when one considers the reasonableness of a given restriction, one inevitably enquires also whether the said restriction is not unreasonable; but since the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to pursue this matter any further, because we are satisfied that the question raised by Mr. Setalvad is concluded against him by a decision of this Court. 37. In Saghir Ahmad v. The State of U.P.(1) where this Court was dealing with the invasion of the citizens' fundamental right under Art. 19(1)(g), it has been observed that when the enactment on the face of it is found to violate a fundamental right guaranteed under Art. 19(1)(g), it must be held to be invalid, unless those who support the legislation can bring it within the purview of the exception laid down in clause (6) of Art. 19. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conducive to the welfare of the community. It is true that on several occasions, this Court has generally observed that a presumption of constitutionality arises where a statute is impeached as being unconstitutional, but as has been held in the case of Saghir Ahmad(1) in regard to the fundamental right under Art. 19(1)(g) as soon as the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictions imposed by it by way of taxation are reasonable and in the public interest within the meaning of Art. 304(b). This enquiry would be of a similar character in regard to cl. (6) of Art. 19. 38. That naturally takes us to the question as to whether the respondent has shown that the restrictions imposed by the Act by levying a tax on the movement of tea can be said to be reasonable and in the public interest. The decision of this question will inevitably involve the balancing of the importance of freedon of trade as against the requirements of public interest. Art. 304(b) necessarily postulates that considerations of public interest may require and justify the imposition of restrictions on the freedom of trade, provided they are reasonable. In determining the reasonableness of the restrictions we will have to bear in mind again the importance of freedom of trade and the requirements of public interest. It is a question of weighing one relevant consideration against another and harmonising both the competing interests so as to serve the public interest in the end. This process of assessment may not always be easy, but, nevertheless, we must try to weigh the pros and cons urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasten to add that the significance of his consideration cannot also be exaggerated. 41. Mr. Setalvad urges that evidence in the case shows that the State has levied the tax on the goods carried because it wants to utilise the income for the purpose of keeping the roads in order and to meet the huge expenses incurred in maintaining the waterways in the State. In the affidavit filed on behalf of the respondent, details have been given about the expenditure incurred by the State on roads and waterways from year to year, and the revenue received by it form the carriage tax during the same period. The affidavit points out that tea and the jute are the main products of the State of Assam and in order to have a regular and easy flow of trade, the State has to maintain the roads. The trade in these commodities through waterways is cheaper and, therefore, the State has also to incur large sums on maintaining the waterways The statement filed in the affidavit clearly shows that every year the expenditure incurred is very much more than the revenue received from carriage tax. It may perhaps be that since the ton-mileage method has not been adopted in imposing the tax, the State may not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nasmuch as it is discriminatory and imposes an unreasonable restriction on the citizens' fundamental right to trade under Art. 19(1)(g). We have already cited s. 34. The argument that the restriction imposed by s. 34 is unreasonable, proceeds on the assumption that sub-section (2) prohibits a producer from ventilating his grievance against irregular, excessive, or illegal levy of the tax before any forum, and such a prohibition, it is urged, is patently unreasonable. We are satisfied that the assumption on which the argument is founded is completely misplaced. What s. 34(2)(a) prohibits is merely a suit or the other proceeding in any court. It does not prohibit the remedy of an appeal or revision specifically provided by sections 16 & 17 of the Act. 44. Then it is urged that s. 34(1) makes an invidious distinction between producers who had been ordered to pay the tax under the earlier Act and who took no steps to challenge the said levy either by an appeal or revision, and those who had adopted the remedy of an appeal or revision under the said Act. In the case of the latter category of producers the appeals and revisions would be continued and dealt with as though the said pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y tea and jute as objects of taxation. The argument appears to be that the legislature should have taxed other commodities along with tea and jute and in so far as only tea and jute have been selected for the purpose of taxation, Art. 14 has been contravened. This argument is entirely fallacious. It is not disputed that tea and jute are the main products of the State of Assam and it is not surprising that the Assam Legislature, therefore, levied tax on the said two articles. Besides, the legislature which is competent to levy a tax must inevitably be given full freedom to determine which articles should be taxed, in what manner and at what rate, vide Raja Jagannath Baksh Singh v. The State of U.P.( [1963] 1 S.C.R, 220). It would be idle to contend that a State must tax everything in order to tax something. In tax matters, "the State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. The Supreme Court of the United States of America has been practical and has permitted a very wide latitude in classification for taxation"( Willis on Constitutional Law'p. 587.). This approach has been approved by this Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prescribed a different machinery for the recovery of the tax imposed by it. Section 3 of this Act makes the owner liable to pay the tax and s. 2(7) defines the owner as meaning the owner of a taxable vehicle and includes in that category the four types of persons specified by clauses (a) to (d) of s. 2(7). The argument, therefore, is that the Act was deliberately passed by the legislature merely for the purpose of recovering dues to which it had originally made a claim under the earlier Act which was unconstitutional and that, it is suggested, makes the Act open to the charge that it represents a colourable exercise of legislative power. We are satisfied that there is no substance in this argument. It is not disputed that the power to make a law necessarily includes the power to make the provisions of the law retrospective. It is also not disputed that it is within the competence of a legislature to pass validating Acts, because the power to pass such validating Acts is essentially subsidiary to the main power of legislation on the topics included in the relevant List. Therefore, if the legislature felt that the infirmity in the earlier Act could be cured and it proceeded to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the points argued by Mr. Pathak. He contends that the tax levied by the Act is invalid because a tax can be levied on goods carried only if the said goods join the mass of goods in the taxing State, In the present case the goods had not entered the mass of goods in the State of Assam at any stage; they just traveled for a very short distance on their way from the tea garden, to the Calcutta Port and that cannot attract a tax under Entry 56 of List 11. In support of this argument, Mr. Mazumdar has invited our attention to the decision of this Court in The Central India Spinning and Weaving and Manufacturing Co. Ltd., the Empress Mills, Nagpur v. The Municipal Committee, Wardha([1958] S.C.R. 1102). In that case, this Court was considering the scope and effect of s. 66(1)(c) of the C.P. and Berar Municipalities Act, 1922, and the decision turned upon the true interpretation of the' words "imported into". In that connection, the legislative history of the octroi duty was examined and it was held that the concept of import requires that. the goods which are brought into must mix,-up with the mass of the property, in the local area where the goods are alleged to have been importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of the traffic of a railway and belong to or are hired or worked by the authority administering the railway. It is common ground that the ferries by which tea chests of the petitioners are carried over the inland waterways in Assam do not belong to the railway, nor are they hired or worked by the authority of the railway to which the goods were consigned for carriage. In fact, s. 74E of the Railway Act which, after amendment, has become s.76D in 1961, clearly brings out the fact that when any goods are tendered to a railway administration for carriage by railway and have been booked through over a railway or any other transport system not belonging to the railway administration, the person who tenders the goods shall be deemed to have contracted with the railway and the said other transport system separately. Therefore, the argument based on the fact that the goods have been entrusted to the railway for through carriage, and so, the carriage of the goods should be held to be outside the purview of s. 3 of the Act, cannot be sustained. 52. That leaves only one more point urged by Mr. Mazumdar to be considered. Mr. Mazumdar contends that the tax is invalid for the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (on Goods Carried by Road or on Inland Water-ways) Act, 1961. (Act 10 of 1961), passed by the Legislature of the State of Assam. There are two petitioners, one of whom is a limited company and cannot, therefore, admittedly maintain the petition which is under Art. 32. It is conceded that the petition is maintainable by the other petitioner, an officer of the Company, as he is interested in the rights of the Company. No question of the competency of the petition was, therefore, raised on behalf of the respondents who are the State of Assam and two of its officers concerned with the collection of the tax under the Act. 57. The petitioner Company is the owner of a tea estate in Jalpaiguri in the State of West Bengal. One of the grounds on which the validity of the Act is challenged is that the Act imposes an unreasonable restriction on the trade of the Company. The respondents contend that the Act is valid in view of the provisions of Art. 304(b) and also cl. (6) of Art. 19 of the Constitution. They say that the-restriction imposed by the Act is reasonable. Article 301 of the Constitution provides that subject to the other provisions of Part XIII, trade, commerce and intercours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the proviso to Art. 304(b) of the Constitution. As I apprehend the judgment of Subba Rao J., in that case, he seems to have taken the same view though he used the description 'regulatory measure' to include measures laying down the rule of the road as also measures intended to raise funds for construction and maintenance of roads. This was the opinion of the majority of the Court in that case. It is unnecessary to refer to the other opinion expressed in it. 60. Neither of these cases, however, has any bearing on the case in hand for it is not contended by the respondents that the impugned Act was a compensatory measure. It was of course not a regulatory measure as laying down a rule of the road. Indeed it Was not contended that the impugned Act did not impose restrictions on the movement of trade. In view of the sanction of the President which had been ,obtained in the present case, the only question concerning the freedom guaranteed by Art. 301 was whether the restriction imposed by the Act was reasonably required in the public interest. It was said that the impugned Act (Act 10 of 1961) is practically in the same terms as the predecessor Act of 1954 but that by itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tea for about two miles on Assam waterways. 63. At the hearing in this Court learned counsel appearing in support of the petition really attacked only two sections of the impugned Act, namely, ss. 3 and 34. Section 3, which is the charging sections is in these terms: S. 3. (1) Subject to the provisions of this Act, there shall be levied a tax on (a) manufactured tea and (b) Jute in bales carried by motor vehicle, cart, trolley, boat, animal and human agency or any other means except railways and airways in such manner a,-Id in respect of such period and at such rate as specified in the Schedule. (2) Such tax levied on manufactured tea shall be realised from the producer and that levied on jute shall be realised from the dealer: Provided that where tea is sold at the factory premises, the producer shall be liable for realisation of tax from the purchaser with effect from such date as the Government, by notification, appoint, for the carriage of such tea as provided in this section and the producer shall be liable for the payment of such tax notwithstanding the fact that the tea is not carried by the producer: X X X X X 64. The first contention was that the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;producer' in that sub- section includes one who does not himself carry the tea, a tax can be legitimately levied on him when the tea is carried as a result of its sale by him and for facility of collection of the tax. 66. It was next said that the proviso in s. 3 may, if effect is given to it from a past date, impose a tax on a producer which he could not collect from the purchaser. It was pointed out that if he was made liable by the notification mentioned in the proviso in respect of sales which had already taken place, he would have to pay the tax personally as the sales having taken place, he could no more collect the tax from the purchaser. It was contended that this would make the restriction put by the Act unreasonable and also make the provision incompetent as outside Item 56 of List 11 for the reasons earlier mentioned. It was also said that this would create a discrimination between producers hit by such retrospective notification and those whose sales came after the date when the notification was published. All these reasons, it was contended, would make the proviso illegal and void. I think the whole contention is imaginary and unfounded. It is based on the notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But I do not find any prohibition in Art. 304. The effect of Arts. 301 and 304 is that the freedom of trade is not to be restricted by law passed by a State except by a law imposing a reasonable restriction on it in the interest of the-public and passed with the sanction of the President. It then comes to this that the freedom can be restricted by a law which has to satisfy the two conditions. Article 304, therefore, permits and does not prohibit. There is no scope for applying here the Punjab Province case(1). 69. The next point to which I wish to refer is that the restriction imposed by the tax levied under the Act is not reasonable. A question was raised as to on whom the onus to prove the reasonableness of the restriction lies. It was said that it has been held by this Court in Saghir Ahmad v. The State of U.P.(2) that the onus lies on the State. It must be conceded that it does seem to have been so held there. On the other hand, however, there is a very large number of cases where it is said that there is a presumption as to the constitutionality of a statute and that, therefore, the onus of showing that it is unconstitutional is on the party so alleging: see the cases coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70. The first ground on which it was said that the Act imposed an unreasonable restriction was that the rates imposed by it were flat rates. The rates were prescribed in the Schedule mentioned in s. 3 and different rates were fixed for different periods of time but in respect of each period there was one rate, for example, between June 1, 1954, and June 30, 1955, the rate was one pice per pound. The point made was that the tax being a tax on carriage it becomes an unreasonable restriction if the tax did not vary with the distance over which the thing was carried. Put that way, it would really seem not a question of reasonableness but a question of legislative competence. I am wholly unable to see that Item 56 in List 11 requires that the tax imposed must be measured according to the distance over which the goods are carried. Tested by the scale of reasonableness also, a flat rate does not seem to me to be wanting in that quality. One may well ask why is a flat rate not reasonable? I find no answer. Why is a rate depending on the distance carried more reasonable? Again I find no answer. If the rate varied with distance, then it is conceivable that in many cases the burden would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or realised, any returns furnished, any proceedings commenced, any notification published any action taken or anything whatsoever done under the provisions of the Act repealed, shall be deemed to have been made, incurred, levied, realised, furnished, commenced, published, taken or done under the corresponding provisions of this Act. (2) Notwithstanding anything contained in any judgment, decree or order of any court, all taxes imposed or realised or purporting to have been imposed or realised under the Act repealed shall for all purposes, be deemed to be, and to have been, validly imposed or realised and accordingly- (a) no suit or other proceeding shall be maintained or continued in any court against the Government or any person or authority whatsoever for the refund of my taxes so paid; and (b) no court shall enforce any decree or order directing the refund of any taxes so paid. 74. It was first said that the sub-section prevented people from whom tax had been collected under Act 13 of 1954, from taking proceedings in court, while those subjected to the tax only under the impugned Act were not so prevented. If by 'Proceedings in court' are meant proceedings outside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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