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TMI Blog1965 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount of tax imposed in respect of these vehicles by the assessment orders in question is Rs. 19,062-93P. These orders have been passed under section 2 of the Rajasthan Passengers and Goods Taxation (Validation) Ordinance, 1964 (Ordinance No. 4 of 1964). This Ordinance was made and promulgated by the Governor of Rajasthan on May 15, 1964. Aggrieved by these orders, the petitioner filed appeals before respondent No. 2, but respondent No. 2 refused to entertain the said appeals unless the petitioner paid in advance the tax imposed by the orders under appeal. Whilst these appeals were pending before respondent No. 2, the petitioner moved for stay in respect of the recovery of the tax assessed, but the said application was rejected on the ground that there was no provision in law to. entertain any such application. That is why the petitioner submitted an application before the Commissioner, Commercial Taxes, Rajasthan on the 3rd February, 1962 and prayed that his buses should not be attached and sold in execution of the orders of assessment, against which he had preferred appeals, pending the hearing and final disposal of the said appeals. The Commissioner rejected this application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 21 of the principal Act authorised the Government of Rajasthan to frame rules consistent with the said Act for securing the payment of tax and generally for the purposes of carrying into effect its provisions. Accordingly, the Government of Rajasthan framed suitable rules which came into force on the 21st May, 1959. Thereupon, a notification was issued by respondent No. 1 on the 30th April, 1959 under s. 3 of the said Act and ;It came into force, on May 1, 1959; it directed the manner in which, and the rates at which, the tax shall be charged and recovered. These rates were the same as had been prescribed by s. 3 of the same Act as maximum permissible rates. This notification was made effective on and from the 1st May, 1959. There is no dis- pute that the principal Act is valid and that the notification issued under it is also valid. In 1961, the Rajasthan Finance Act (No. 14 of 1961) was passed. Section 8 of this Act purported to amend s. 3 of the principal Act. As a result of this amendment, the maximum rate at which the State Government could levy, charge and collect tax on fares and freights was increased from 1/8th to 15 per cent in the first category of cases; and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o finally determine the question as to whether by reason of the said infirmity, the said earlier Acts were void or not, because in its opinion, the Act of 1964 "is not merely an amending and a curative Act in that limited sense, but it is really an Act which virtually re-enacts the provisions of the earlier Acts which suffered from a constitutional infirmity" (P. 300). The High Court examined the contentions raised by the petitioners that (1) [1965] I.L.R. 15 Raj. 285. the provisions of the Act were invalid, and has rejected the petitioners' case that the said provisions suffered from any constitutional infirmity. In the result, the petitions filed before it challenging the validity of the Act failed. It appears that the petitioners had also challenged the validity of the recovery of penalty for non-payment of tax, and the High Court held, following its earlier decisions, that the levy of any penalty in the cases before ,At would be illegal and, therefore, must be struck down. In other words, except for the limited relief granted in respect of the levying of the penalty, the substantial contention raised by the petitioners challenging the validity of the Act has been rejected by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken or things done during the period between the 9th day of March, 1961 and the date of commencement of this Act. The last section 5 repeals Ordinance No. 4 of 1964. In the present proceedings we are not concerned with lump sum payments; and so, s. 3 does not fall to be considered. At this stage it is convenient to set out sections 2 and 4; they read as under "2. In section 3 of the Rajasthan Passengers and Goods Taxation Act, 1959 (Rajasthan Act 18 of 1959) hereinafter referred to as the principal Act, to subsection (1), the following proviso shall be and be deemed always to have been added, namely -- Provided that the tax shall be charged in respect of all passengers carried and goods transported by motor vehicles,- (a) during the period between the 1st day of May, 1959 and the 8th day of March, 1961, at the rate of- (i) one-eighth of the value of the fare or freight in case of cemented, tarred, asphalted, metalled, gravel and kankar roads and (ii) one-twelfth of the fare or freight, in other cases, subject to a minimum of one Naya Paisa in any one case, the amount of tax being calculated to the nearest Naya Paisa; and (b) during, the period between the 9th day of March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been held to be invalid by the Rajasthan High Court in the case of Vijai Singh((1965) I.L.R. 15 Raj. 285. ) and it would be incompetent to the State Legislature to validate the said Acts in spite of the decision of a court of competent jurisdiction. We are not impressed by this argument. In the first place, it is not clear that the Rajasthan High Court has held that the, said earlier Finance Acts are void ab initio; in fact, as we have already pointed out, the said High Court thought it unnecessary to pronounce its considered opinion on that aspect of the matter, because it held that the Act of 1964 with which it was primarily dealing in the said proceedings not merely amended or cured the earlier Finance Acts, but re-enacted the provisions of the said Acts, and so, the provisions of the said Acts became operative by their own force. Therefore, factually, it is not correct to say that the said earlier Acts have been struck down as void ab initio by any court of competent jurisdiction. Besides, in assessing the validity of this argument, it is necessary to remember that the Act was passed on September 8, 1964 and the judgment of the Rajasthan High Court was pronounced on Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent assent of the President or by passing a subsequent Act re-enacting the provisions of the earlier law and securing the assent of the President to such Act, is a matter which the Legislature can decide in the circumstances of a given case. Legally, there is no bar to the legislature adopting either of the said two courses. Therefore, the preliminary objection raised by Mr. Tiwari against the validity of the Act fails. That takes us to the construction of section 2 and 4 of the Act. It would be noticed that s. 2 in fact does not purport to validate the earlier Finance Acts of 1961 and 1962. What it does ;Is to amend retrospectively S. 3 of the principal Act by inserting a proviso to sub-s. (1) of the said section. On its plain reading, s. 2 has the effect of inserting the said proviso to s. 3(1) of the principal Act; and since the amendment so made is, in terms, retrospective, when a tax is levied for the periods covered by clauses (a) & (b) of the proviso thus introduced in s. 3(1) of the principal Act, the Court must proceed to deal with the matter on the basis that these clauses had been introduced in the principal Act right up from the commencement. We have already noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment made by s. 2. In other words, s.2 does not purport to re-enact, by retrospective amendment, the rates prescribed by the notification issued under the Finance Act 11 of 1962. We are inclined to take the view that the draftsmen of the Act have referred to the first period unnecessarily in the said proviso and have failed to refer to the third period, through oversight. This infirmity tends to show that the drafting of :2 has been casual and somewhat careless. As we will presently point out, the consequence would be that the higher rates prescribed for the period between 26th March, 1962 and the 9th September. 1964 by the notification issued under Finance Act 11 of 1962, are not saved by the general provisions of s. 4 of the Act. It is to the said provisions that we must now turn. Section 4 consists of three parts. In its first part, it provides that the several sections of the three Finance Acts enumerated by it, shall not be deem-Id to be invalid, or ever to have been invalid, during the period there specified, merely by reason of the fact that Art. 255 of the Constitution had not been complied with. Part 2 of the said section provides inter alia that the tax levied, paid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate that the Legislature thought that it was competent to it to cure, by its own legislative process, the infirmity resulting from the non-compliance with Art. 255 When it passed the earlier Finance Acts in question, and it was probably advised that such a legislative declaration would'be valid and effective, provided it received the assent of the President. In our opinion, the approach adopted by the Legislature in this case is entirely misconceived. The Legislature, no doubt, can validate an earlier Act which is invalid by reason of non-compllance with Art. 255 and such an Act may receive the assent of the President which will make the Act effective. The Legislature cannot, however, itself declare by statutory provision that the failure to comply with Art. 255 can be cured by its own enactment, even if the said enactment received the assent of the President. In our opinion even -the assent of the President cannot alter the true constitutional position under Art. 255. The assent of the President cannot, by any legislative process, be deemed to have been given to an earlier Act at a time when in fact it was not so given. in this context there is no scope for a retrospective de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the phraseology adopted by s. 4 of the Act; but it would be fallacious to compare the said provision with s. 4, because the ban which s. 2 of the said Act intended to lift could validly be Iifted by a Parliamentary statute. Art. 286(2) of the Constitution which was, in force at the relevant time had provided, inter alia, that except in so far as Padiament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place in the course of inter-State trade or commerce. What s. 2 of the said Act did was to make a law as expressly authorised by Art. 286(2); and naturally in exercise of the power conferred on it by the said provision, it enacted the provisions of s. 2 and made them retrospective. It is significant that the power to lift the ban which was exercised retrospectively by Parliament, vested in Parliament and not in any outside authority like the President; and so, Parliament was perfectly competent to validate the several State Acts which were held to be invalid, by adopting the legislative expedient of making a law as authorised by Art. 286(2) and providing for its retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r excessive retrospective operation prescribed by a taxing statute amounts to the contravention of the citizens' fundamental right; and in dealing with such a question, the Court may have to take into account all the relevant and surrounding facts and circumstances in relation to the taxation. In the present case, having regard to the legislative background of the provision prescribed by s. 2, there can be little doubt that there is no element of unreasonableness involved in the retrospective operation cl. (b) of the proviso added by the said section to s. 3(1) of the principal Act. The result is that s. 2 of the Act is valid and the tax in question can be recovered from the petitioner for the periods covered by clauses (a) and (b) of the proviso as therein prescribed. In this connection, it will be recalled that the provision prescribed by cl. (a) of the proviso is really superfluous, because the same lax could have been validly recovered at the prescribed rates under e notification issued on April 30, 1959 under s. 3 of the principal Act. But as we have already pointed out, the period between arch 26, 1962 to September 9, 1964 is not covered by the provisions inserted by s. 2 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that it sought to validate taxes already recovered under an invalid Finance Act. Rejecting the argument that such retrospective validation of tax illegally recovered amounts to the contravention of the citizens' fundamental right under Art. 19(1) (f) or (g), this Court held that if in its essential features a taxing statute is within the competence of the Legislature which passed 1 its character is not necessarily changed merely by its rotrospec tive operation so as to make the said retrospective operation either unreasonable or outside its 'legislative competence. A similar view has been expressed by this Court in Jaora Sugar Mills (Pvt.) Ltd. v. The State of Madhva Pradesh & Others ([1966] 1 S.C.R. 518.). The result is, the writ petition is partly allowed and the pugned orders of assessment are set aside in so far as they relate to the period between 26th March, 1962 and the 9th Septemberm, 1964, and we direct the assessing authorities to levy a proper assessment in the ligght of the judgemnt. The assement orders in respect of the remaining period are valid and the petitioner's prayer that they should be sot aside, is rejected. in view of the fact that the petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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