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1971 (12) TMI 110 - SUPREME COURT

1971 (12) TMI 110 - SUPREME COURT - 1972 AIR 1804, 1972 (2) SCR 853, 1972 (4) SCC 635 - Civil Appeals Nos. 932 to 934 of 1968 - Dated:- 14-12-1971 - MITTER, G.K., SIKRI, S.M. (CJ), SHELAT, J.M., DUA, I.D. AND KHANNA, HANS RAJ. S.V. Gupte, K. Srinivasamurthy, Naunit Lal and Swaranjit Sodhi, for the Appellants G. Narayana Rao, A. V. V. Nair, P. Ram Reddy and K. Javaram, for the Respondents JUDGMENT: The Judgment of the Court was delivered by Mitter, J. All these appeals and Writ Petitions are dire .....

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n the State of Andhra Pradesh tinder stage carriage permits granted by the Transport authorities under the Motor 'Vehicles Act IV of 1939. Their complaint against the ever increasing burden of taxation they are called upon to bear which is said to have passed the breaking point. A short history of the taxes levied in the area which came to Andhra Pradesh from the State of Madras and the increase thereof from stage to stage by the new State based on the seating capacity of buses with stage ca .....

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r receiving the assent of the President on February 2, 1963. This is the Act now in force. It is an Act to consolidate and amend the law relating to levy a tax on motor vehicles in the State of Andhra Pradesh. Under s. 3(1) of the Act the State Government is empowered by notification from time to time, to direct that a tax shall be levied on every motor vehicle used or kept for use in a public place in the State. Under sub-s. (2) of s. 3 the notification is to specify the class of motor vehicles .....

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s running less than 100 miles per day and ₹ 67-50 on vehicles covering a higher mileage. A crop t of writ petitions was filed before the High Court in the year 1963 praying for the issue, of a writ restraining the State, from enforcing the provisions of the Act of 1963 and of the notification dated March 27, 1963. By a common judgment and order dated September 6, 1963 the High Court dismissed all the writ petitions. The first group of appeals arises out of this judgment. It was contended o .....

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his topic that the taxes were levied more for purposes of general revenue of the State than as a benefit for the facilities afforded to the operators of transport vehicles, since the taxes were far in excess of the requirements for the construction of new roads and bridges and the maintenance of existing ones. The High Court found itself unable to accept the above submission and on a scrutiny of the budget estimates for the year 1963-64, the receipts under the Taxation Act, the amount collected .....

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to afford facilities to the operators of the transport vehicles, the tax levied answered the description of compensatory tax and did not interfere with the freedom of trade and commerce. As such the taxes were held not to offend Art. 301 of the Constitution. The High Court further took the view that it had not been shown that "the power ceded to the State Government by this legislative measure was in any way detrimental to the public good or that it was opposed to the well recognised princi .....

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beneficial to the operators. Reference was made to the fact that even subsequent to the enhancement of the tax there had been considerable competition for securing permits whenever any proposal was mooted by the transport authorities which according to the court went to show that the operators themselves considered that it would be a profitable business. In the opinion of the High Court, the increase in the taxes was more than offset by the sanctioned increase in the fares and the grievance of t .....

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22, 1968 the Government of Andhra Pradesh purported to amend the First Schedule to the Act by notification No. 434 by increasing the maximum quarterly tax in respect of sub items (iii) and (iv) of item 4 to ₹ 121 in respect of buses Plying exclusively within municipal limits and to ₹ 135 in the case of other buses. On the same day the State Government issued notification No. 435 in exercise of the powers conferred by sub-s. (1) of s. 9 of the Act directing the substitution of higher .....

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was also claimed that the procedure adopted for the levy of the tax had been changed and instead of a flat rate of levy on the basis of the number of seats it was now made to relate to the actual mileage per day covered by the vehicles. A challenge was made to the additional impost on spare buses which bus operators running more than a certain number of buses per day were obliged to reserve for use in the event of any break-down. It was asserted that even for these buses, no matter whether they .....

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lic interest but only a revenue yielding measure. Since it did not company with the provisions of Part III and Part XIII of the Constitution it was illegal and unconstitutional. and (c) the levy of tax on spare buses was illegal. By a common judgment and order dated April 26, 1968 the High Court rejected the contentions raised and dismissed this group of writ petitions. This had led to the filing of the second group of appeals before us. The two writ petitions filed in this Court under Art. 32 r .....

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e had been compliance with the proviso to Art. 304(b) in the matter of obtaining the requisite sanction, it was open to the Court to go into the question of reasonableness both with regard to the said provision as also Art. 19(1)(g) read with cl. (6) of that article. The Court was entitled to determine whether the imposition was in public interest. 3.The Act violated Art. 14 of the Constitution inasmuch as it was not made applicable to all the areas under the State and vehicles on inter-State ro .....

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s sanction of the President to the Bill an Act of this nature could be held to be valid only if it was shown that the restrictions imposed were reasonable and in public interest. It was not contended on behalf of the State in that case that the impugned Validating Act imposed a tax which was by way of regulatory or compensatory measure. The Court therefore addressed itself to the question whether the restrictions imposed were reasonable and in public interest within the meaning of Art. 304(b). T .....

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e the High Court or before this Court to establish that the impugned Validating Act with regard to imposition of tax was not in public interest. The utmost according to this Court "that could be said was that it would result in the diminution of profits." The Court also turned down the contention based on the violation of Art. 14. In the first set of appeals now before us learned counsel for the appellants submitted that in view of the, earlier decision of this Court the only question .....

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he aforementioned provisions of the Constitution. Attempt was made to show that the impost was purely for the purpose of making revenue and was not a compensatory measure. Reliance was placed on the fact that before the raising of the impost to ₹ 67.50 per _quarter the rate of tax was ₹ 50 per seat per quarter. Our attention was drawn to annexure 'A' attached to the counter affidavit of Writ Petition No. 361 of 1963 out of which appeal No. 932 has arisen, giving a chart of qu .....

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t considerable and in the higher mileage groups the increase was slight. According to the counter affidavit of the State, there were few, if any, buses covering less than 50 miles per day. In that view of the matter there is no case of distinction so far as the first group of appeals is concerned from the decision of this Court in Nazeeria Motor Company's case. Besides nothing was shown to induce us to disregard the figures in the budget estimates referred to by the High Court in its judgmen .....

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ished in November 1967 purporting to show a huge surplus of revenue over expenditure on roads etc. in 'the State of Andhra Pradesh during the years 1964-67. The relevant portion of the report is given below : "Statement showing the expenditure on Roads by Andhra Pradesh State during the years 1964-67." "State Revenue from Road Transport and Expenditure on Roads by Andhra Pradesh State during the years 1964-67. Expenditure Figures in lakhs of Rupees Year Revenue Original Mainte .....

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erable surplus in the revenue from road transport over expenditure on roads by the State of Andhra Pradesh during the years mentioned. Our attention was however drawn to the additional counter affidavit of the State affirmed before the High Court on April 24, 1968 wherein it was said that the report relied on was misleading and the chart which was taken from the annexures to the report of the Road Transport Taxation Enquiry Committee showing surplus was contrary to the prevalent state of affairs .....

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rmation regarding the year 1966-67. It was also said that in the reply dated 12-1-1966 by the, State Government the estimated figure for the construction of roads was ₹ 2,49,45,200/- and the cost of maintenance was ₹ 6 crores and the total expenditure was thus of the order of Rs' 8,50,00,000/-. It was reiterated that the Taxation Enquiry Committee did not ask for the figures for 1966-67. The High Court went into this question in some detail and found that as per the budget estima .....

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ment fund works, capital outlay on roads works came to ₹ 8,75,87,900/- and taking into account the figures on the receipt side in the budget estimates, the court was of the view that the total receipts would fall short of the anticipated expenditure by about ₹ 50 lakhs. The High Court also scrutinised the statistical data available in the report of the Road Transport Enquiry Committee and the explanation put forward by the State and observed : "the figures given in the report of .....

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State but was intended to meet the expending requirements of maintenance of old roads and development of the road system as a whole. On these facts the High Court concluded that there was no warrant for the charge that the increased levy ceased to be a compensatory measure. In the second group of petitions, the High Court also negatived the contention raised on behalf of the petitioners that the increase in taxation would virtually throw them out of the transport business. It was argued before t .....

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ators Government had permitted an increase in fares to be charged by the operators by another order bearing the same date as that of the impugned order.' Reliance was also placed on the fact that on previous occasions the operators bad no been slow in utilising similar permission to raise the fare structure. It was further submitted on behalf of the. State before, the High Court that "the Motor Vehicles Taxation had undergone changes to make it confirm to and subserve the development of .....

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urt thus found justification for the additional levy in the conditions obtaining in the State. It was submitted before us, as was done before the High Court, that taxation by reference to mileage specially in regard to bus operators who had to ply their vehicles in other States where the rate of taxation was much lower was an anachronism and an unreasonable restriction. Our attention was drawn to Annexure 2 to the Writ Petition No. 1792 of 1968 where the total mileage covered by various bills op .....

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ature of the tax. The High Court accepted the explanation on behalf-of the State that "there were reciprocal arrangements between the States and consequently the provisions made by the other States in regard to the free movement on their roads, constituted a compensator measure for the tax even though it is wholly levied by the State of Andhra Pradesh". We see no reason to take a view different from the above. The facts and figures disclosed do not justify us in coming to the conclusio .....

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