9911796707
TMI Blog2023 (9) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... filed assailing the final Orders of the High Court of Himachal Pradesh dated 11 December, 2008 and 06 May, 2009, whereby the vires of the Himachal Pradesh Passengers and Goods Taxation Act, 1955 (hereinafter referred to as the "Act of 1955" for the sake of brevity) as amended from time to time, particularly by the Himachal Pradesh Passengers and Goods (Amendment and Validation), Act, 1997 (hereinafter referred to as the "Amendment and Validation Act of 1997" for the sake of brevity) has been upheld and the writ petitions filed by the appellants herein, i.e., Civil Writ Petition Nos. 725 of 1998, 422 of 1998, 401 of 2001, 464-467 of 2001 and 79 of 2007, have been dismissed. Bird's eye view of the controversy: 2. The controversy in these cases revolves around the question whether, by enacting the Amendment and Validation Act of 1997, the Himachal Pradesh State Legislature has validly removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997. In the said judgment, the Act of 1955 had been held not to include within its scope, the activity of the appellants in providing gratis transport facilities for their employees and their children, as the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch purpose were owned and operated by the appellant-NHPC Ltd. 3.3. The Assessing Authority under the Act of 1955, Respondent No. 3 herein, assessed the liability of the appellant-NHPC Ltd. to pay passenger tax under the Act for the years 1984-1985 to 1986-1987 and 1987-1988 to 1990-1991 in respect of the activity of providing transport facilities to its employees and their children. Assessment Orders were passed on 01 October, 1992 stipulating the liability of the appellant, NHPC Ltd. to pay passenger tax under the Act of 1955, on the premise that its employees and their children were passengers under the Act and therefore, the appellant was liable to pay passenger tax for providing them with transport facilities as described hereinabove. It is to be stated at this juncture that the Assessment Orders were passed on the assumption that every bus of the appellant, NHPC Ltd. was plying on every day of the relevant years; a passenger travelled on every seat of every bus; and every employee travelled the full distance shown in the logbook. 3.4. The appellant filed Revision Application before the Commissioner, Excise and Taxation, Himachal Pradesh, Respondent No. 2 herein, challenging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant and directed the Respondents to refund the tax collected under the provisions of the Act of 1955. The pertinent findings of the Division Bench of the High Court are culled out hereinunder: i. That the scheme of the Act of 1955 was to levy a tax on passengers of certain motor vehicles only. Intention of the legislature could be gathered from the various definitions contained in Section 2 of the Act, and the same was to make the Act applicable only to persons who carried on the business of transport. The definition of 'owner' would fortify such finding, as 'owner' was defined to mean a person holding a permit under the Motor Vehicles Act. ii. That the liability of the assessee was to be determined for the years 1984-1985 to 1986-1987 and 1987-1988 to 1990-1991. Prior to 31 May, 1988, 'motor vehicle' was defined to mean "a public service vehicle or public carrier, or private carrier or a trailer attached to any such vehicle." Further, the definition of 'passenger' excluded from its scope the driver, conductor and employee of the owner of the motor vehicle. Therefore, the appellant's buses would not be covered under the definition of 'motor vehicle', as defined at the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be given effect to unless the terms 'route' and 'normal rate' had been expressly and unambiguously defined. 3.7. A Special Leave Petition filed by the Respondents before this Court, assailing the judgment of the High Court dated 27 March, 1997 was dismissed by an Order dated 28 July, 1997. 3.8. In that background, on 13 August, 1997, the Himachal Pradesh Passengers and Goods (Amendment & Validation) Ordinance was promulgated. The Himachal Pradesh Legislative Assembly passed the Amendment and Validation Act of 1997 on 27 September, 1997 with a view to remove the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997. By virtue of the Amendment and Validation Act of 1997, definitions of the terms 'business', 'fare', 'freight' and 'passenger' were amended. Further, definitions of terms such as 'Private Service Vehicle', 'road', 'Transport Vehicle', came to be introduced. Explanation (1) to Section 3 (1) of the Act of 1955, which was the charging provision in the said Act, was omitted and Sub-section (1A) was inserted in Section 3, which was to serve as a charging provision. The nuances of the amendments introduced by the Amendment and Validation Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the vehicles, it could not be said that the tax is levied on the motor vehicles. ii. That the Preamble of the Act of 1955 provided that the same was an Act to provide for levying tax on passengers and goods carried by road in 'certain' motor vehicles. The word 'certain' is omitted by the Amendment and Validation Act of 1997. That this change in no way suggests that the scope of the Act was amended to include taxation on vehicles, instead of on the passengers and goods carried therein. iii. That the defect in the Explanation to Section 3(1) of the Act of 1955, which was noted by the Division Bench of the High Court in passing the judgment dated 27 March, 1997, had also been removed by omitting the said Explanation and inserting Section 3(1A) in the Amendment and Validation Act of 1997, which seeks to bring nonfare paying passengers at par with fare paying passengers. Further, the Competent Authority as well as Schedule I to the Amendment and Validation Act of 1997 prescribe the fare and freight for different categories of motor vehicles and for different roads and the higher of the two would apply. iv. That Section 3(1A) of the Amendment and Validation Act of 1997, when rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry their employees to work sites and children of their employees to schools are free of charge and without collecting any fare from the passengers. They travel gratis and therefore, in that sense, are not passengers at all. Nevertheless, the incidence of tax are on the appellants who are the owners of the buses and other vehicle who have been levied the tax despite the fact that they are not collecting any tax or any fare from their "passengers" who are none other than their employees and children of their employees. Therefore, the Act itself does not apply to the appellants and hence, they are not liable to pay any tax under the Act. iii. It was further submitted that the High Court has failed to understand the import of the amendments made to the Act of 1955 as the said amendments in no way can mulct any liability to pay tax on the appellants herein. That the true import of the Act of 1955, as amended by the Amendment and Validation Act of 1997 is to levy and collect tax on motor vehicles, transgressing Article 246, read with Entry 56 of List II of the Seventh Schedule of the Constitution of India. The said legislative Entry pertains to "taxes on goods and passengers carried b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at notwithstanding the fact that the scope of the term 'business' has been widened, sub-clauses (ii) and (iii) to Section 2 (aa) are to be read in harmony with sub-clause (i) thereof, which provides that 'business' includes the business of carrying passengers and goods by motor vehicles. That if 'business' is held to mean just any trade, commerce, manufacture, adventure or concern, sub-clause (i) of Section 2 (aa), which specifies the nature of business, would become redundant. vi. That if sub-clauses (ii) and (iii) to Section 2 (aa) are interpreted to include even businesses other than the business of carrying passengers, the said sub-clauses would be violative of Article 14 of the Constitution on two counts. First, a person or entity who/which does not carry the business of carrying passengers and goods by motor vehicles, would be treated at par with a person or entity who/which carries on such business. Second, a person or entity who/which does not carry on a business with a profit motive, would be treated at par with a person or entity who/which carries on a business with a profit motive. In both the circumstances, unequals would be treated equally and this is opposed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax vs. Sai Publication Fund, (2002) 4 SCC 57. That in the present case, there is no material to establish that the ancillary activity of providing transport facilities to their employees and their children is conducted with an independent intention to conduct business through such activity. Therefore, in the present case, neither the main activity of the appellants, nor the ancillary activity of providing transport facilities to their employees and their children, would amount to 'business' as defined under the Amendment and Validation Act of 1997. ii. Referring to the various amendments brought about by the Amendment and Validation Act of 1997 and contrasting them with the unamended provisions, it was contended that the said Act has not removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997, nor has it cured the defects in the Act of 1955. That such an enactment is simply contradictory to the decision of the High Court, without addressing the underlying reasoning of the Court. iii. That the retrospective effect of forty-two years, given to the Amendment and Validation Act of 1997 is totally unreasonable and arbitrary. That particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transported, either on fares or freights fixed by the competent authority, under the MV Act, for different classes of roads and motor vehicles in the State, or on fares and freights specified in Schedule I to the Act for different classes of roads and motor vehicles, whichever is higher. That previously, under the Act of 1955, Explanation to Section 3(1), which provided that when passengers are carried and goods are transported by a motor vehicle and no fare or freight, whether chargeable or not, had been charged, the tax was levied and paid, as if such passengers were carried or goods transported, at the normal rate prevalent on the route. The ambiguity in the charging provision, i.e., Section 3 (1) of the Act of 1955 arose on account of the fact that the terms 'normal rate' and 'route' had not been defined under the said Act. Owing to such a defect/lacuna, the charging provision could not be given effect to as noted by the Division Bench of the High Court in the judgment dated 27 March, 1997. That by the Amendment and Validation Act of 1997, Explanation to Section 3(1) has been deleted and Section 3 (1A) has been inserted, prescribing two alternate methods to notionally determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1955, as amended by the Amendment and Validation Act of 1997, was enacted on the strength of Entry 56 of List II of the Seventh Schedule of the Constitution of India, which pertains to "taxes on goods and passengers carried by road and inland water ways." With the aforesaid submissions, it was prayed that the present appeals be dismissed as being devoid of merit and the impugned orders of the High Court, be affirmed. Points for Consideration : 6. Having heard learned counsel for the respective parties and on perusal of the material on record, the following points would emerge for our consideration: i. Whether, by enacting the Amendment and Validation Act of 1997, the Himachal Pradesh State Legislature had validly removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997, whereby the Act of 1955 had been held not to include within its scope the activity of the appellants of providing gratis transport facilities for their employees and their children? ii. Whether the activity of the appellants of providing gratis transport facilities for their employees and their children, would now be a taxable activity under Section 3(1-A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Division Bench of the High Court in Writ Petition No.1733 of 1995, which was allowed by the judgment dated 27 March, 1997 as per the reasons indicated above. 8. With a view to bring the employees of the appellants and their children, travelling in the buses of the appellants without payment of fare within the tax net under the Act of 1955 and also to validate the collection of tax already made thereunder, the Amendment and Validation Act of 1997 was enacted by the Himachal Pradesh Legislative Assembly. By way of the Amendment and Validation Act of 1997, amendments were brought about to the Preamble and various provisions of the Act of 1955 with retrospective effect, viz. date of enforcement of the Act of 1955. The amendments brought about, which are relevant for the purpose of deciding these appeals are as under: i. The preamble, as amended states that it is an Act to provide for levying a tax on passengers and goods carried by road in motor vehicles. The word 'certain' which earlier preceded the term 'motor vehicle' has been deleted by way of the Amendment and Validation Act of 1997. ii. The definition of 'business' has been amended and it now includes, besides the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii. Section 9 has been inserted, which provides for validation of assessments made under the Act of 1955. viii. Schedule I has been added to the Act, which stipulates the fares on which tax would be leviable, for different categories of motor vehicles and class of roads. 9. For easy reference, as submitted by Sri Yashraj Singh Deora, learned counsel, a comparative table of the relevant provisions of the Act of 1955 and the amendments introduced to such provisions, by way of the Amendment and Validation Act of 1997, is provided hereinunder : Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 Preamble An Act to provide for levying a tax on passengers and goods carried by road in certain motor vehicles. An Act to provide for levying a tax on passengers and goods carried by road in motor vehicles. Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 Definition of the term 'business' 2(a) "business" means the business of carrying passengers and good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Motor Vehicles Act, 1939 (4 of 1939) and includes (a) the holder of a permit in respect of such vehicle, (b) any person for the time being in 2(f) "owner means" the owner of the motor vehicle used for carrying passengers or transporting goods in or through the territory of the State of Himachal Pradesh, and includes, - (a) The de-facto and de- jure owners; Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 charge of such vehicle, (c) any person responsible for the management of the place of business of such owner, (d) Government or a Corporation constituted under the Road Transport Corporations Act, 1950; * Any person for the time being incharge of such vehicle; any person responsible for the management of the place of business of such owners; (d) The Government or Corporation constituted under the road Transport Corporation Act, 1950 (64 of 1950): Definition of the term 'Private service vehicle' - (gb) "Private servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax shall be levied on the amount of such lump sum or on such amount as appears to the prescribed authority to be fair and equitable having As the Government may, by notification, direct, subject to a minimum of five paise in any one case, the amount of tax being calculated to the nearest multiple of five paise by ignoring two paise or less and counting more than two paise as five paise.] (1A) Notwithstanding anything contained in sub-section (1), when passengers are carried and goods are transported by a motor vehicle and- i. No fare or freight, whether chargeable or not has been charged, or ii. fare or freight has been charged at a concessional rate, The tax at the rates as directed by notification by the Government under sub-section (1), shall be levied, charged and paid as if the Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 regard to the fare or freight fixed by a competent authority under the Motor Vehicles Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be liable to pay tax at the rate specified in sub-section (1) or such amount of fares and freights as may be determined in the prescribed manner by the prescribed authority.] (3) Where passengers are carried or goods transported by a motor vehicle from any place outside the State [or from any place outside the State to any place outside the State but through the State or from any place within the State to any other place within the State but through the intervening territory of another State] to any place within the State, or from any place within the State to any place outside the State the tax shall be payable in respect of the distance covered within Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 the State at the rate laid down in sub- section (1) and shall be calculated on such amount as bears the same proportion to the total fare and freight as the distance covered in the State bears to the total distance of the journey. (Underlining by us) 9.1. Apart from the above, the salient Sections to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) anything done or any action taken (including any rule or order made, notification issued or direction given or exemption granted or penalty imposed) under the said Act before the commencement of this Act shall be deemed always to have been validly done or taken in accordance with this Act. (2) For the removal of doubts, it is hereby declared that- (a) nothing in sub-section (1) shall be construed in preventing any person- (i) from questioning, in accordance with the provisions of this Act, the assessment, levy, charge, payment or collection of the aforesaid tax; or (ii) from claiming refund of the aforesaid tax paid by him in excess of the amount due from him under this act; and (b) no act or omission on the part of any person, before the commencement of this act, shall be punishable as an offence which would not have been so punishable as if this Act had not come into force." Analysis : "It is when things go wrong that the retroactive validating statute often becomes indispensable as a curative measure; though the proper movement of law is forward in time, we sometimes have to stop and turn about and pick up the pieces." - Lon Fuller, The Morality of Law ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant condition, of course, is that the Legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the Legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is consistent with the rights guaranteed in Part III of the Constitution. (5) The Court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the Legislature. Therefore, they are not the encroachment on judicial power. (6) In exercising legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. (7) The consistent thread that runs through all the decisions of this Court is that the legislature cannot directly overrule the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt, the new legislation can be tested and challenged on its own merits and on the question whether the legislature possesses the competence to legislate on the subject matter in question, but not on the ground of over-reach or colourable legislation." v. In Bakhtawar Trust vs. M.D. Narayan, (2003) 5 SCC 298, this Court observed as under while laying down a three-pronged test to determine the vires of a validating Act: "14. The validity of any statute may be assailed on the ground that it is ultra vires the legislative competence of the legislature which enacted it or it is violative of Part III or any other provision of the Constitution. It is well settled that Parliament and State Legislatures have plenary powers of legislation within the fields assigned to them and subject to some constitutional limitations, can legislate prospectively as well as retrospectively. This power to make retrospective legislation enables the legislature to validate prior executive and legislative Acts retrospectively after curing the defects that led to their invalidation and thus makes ineffective judgments of competent courts declaring the invalidity. It is also well settled that a validatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity of a validating legislation is that the judgment pointing out the defect would not have been passed, if the altered position as sought to be brought in by the validating statute existed before the Court at the time of rendering its judgment. In other words, the defect pointed out should have been cured such that the basis of the judgment pointing out the defect is removed. c) Nullification of mandamus by an enactment would be impermissible legislative exercise (See: S.R. Bhagwat and Ors. v. State of Mysore, (1995) 6 SCC 16). Even interim directions cannot be reversed by a legislative veto (See: Cauvery Water Disputes Tribunal, 1993 Supp (1) SCC 96 and Medical Council of India v. State of Kerala and Ors., (2019) 13 SCC 185). d) Transgression of constitutional limitations and intrusion into the judicial power by the legislature is violative of the principle of separation of powers, the Rule of law and of Article 14 of the Constitution of India." viii. In a recent judgment of this Court in the case of Dr. Jaya Thakur vs. Union of India, 2023 SCC OnLine SC 813, this Court held that a writ of mandamus could not be nullified by a subsequent legislation made by the legislato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which it was founded. 12. The power of a legislature to legislate within its field, both prospectively and to a permissible extent, retrospectively, cannot be interfered with by Courts provided it is in accordance with the Constitution. It would be permissible for the legislature to remove a defect in an earlier legislation, as pointed out by a constitutional court in exercise of its powers by way of judicial review. This defect can be removed both prospectively and retrospectively by a legislative process and previous actions can also be validated. However, where a legislature merely seeks to validate the acts carried out under a previous legislation which has been struck down or rendered inoperative by a Court, by a subsequent legislation without curing the defects in such legislation, the subsequent legislation would also be ultra-vires. Such instances would amount to an attempt to 'legislatively overrule' a Court's judgment by a legislative fiat, and would therefore be illegal and a colourable legislation. 13. At this juncture, we must highlight that separation of powers, as crystalised under the Indian Constitution, is characterised by division of power and functions betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment Act may be declared to be ultra-vires and as a piece of 'colourable legislation.' The device of abrogation, by way of introducing retrospective amendments to remove the basis of a judgment, may be employed when a legislature is under the bonafide belief that a defect that crept into the legislation as it initially stood, may be remedied by abrogation. An act of abrogation is permissible only in the interests of justice, effectiveness and good governance, and not to serve the oblique agenda of defying a court's order, or stripping it of its binding nature. 15. The Constitution of India precludes any interference by the legislature with the administration of justice and judicial determination of the validity of a legislation. The power of abrogation is to be exercised in the light of the said Constitutional mandate. The legislative device of abrogation must be in accordance with the following principles which are not exhaustive: i. There is no legal impediment to enacting a law to validate a legislation which has been held by a court to be invalid, provided, such a law removes the basis of the judgment of the court, by curing the defects of the legislation as it stood before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a legal fiction requiring assessments to be made on the assumption that even passengers who did not pay a fare, were being carried at the 'normal rate' chargeable on the concerned route. There was no definition of 'route' for the purposes of the Act and the definition of 'route' under the MV Act could not be referred to as the routes on which the appellant's buses plied were not 'routes' in the sense defined under the MV Act. Hence, 'route' could not be equated to any 'road' so as to hold the appellant-assessee liable to pay tax under the Act of 1955. That for charging tax, by invoking the Explanation to Section 3(1), routes were required to be prescribed, but since no routes had been prescribed, the Explanation could not come to the rescue of the respondent Authorities. iii. In the absence of any prescription as to what the 'normal rate' would be, the Respondent Authorities could not have levied tax on the appellant based on artificial assumptions. There was no basis to warrant the Authorities from taking into account the fare payable in the adjoining areas, in calculating the 'normal rate.' iv. The charging provision could not be given effect to unless the terms 'route' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hire of contract carriage. It did not include a case where no fare or freight was charged from a passenger. In Section 2(c) of the Amendment and Validation Act, fare or freight has been defined to include sums fixed by the competent authority under the Motor Vehicles Act for the hirer of motor vehicles for carriage of passengers and the transport of goods therein and includes sum payable for a season ticket and where no such fare or freight has been fixed, also includes such sum as specified in Schedule I. 3. The meaning of the word "Motor Vehicle" meant a public service vehicle or public carrier, or private carrier or a trailer when attached to any such vehicle; The scope of the expression "Motor Vehicle" has been extended to mean any transport vehicle, which is mechanically propelled and adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or Sl. No. Defects identified in the Act of 1955 by the Division Bench of the High Court in the judgment dated 27 March, 1997. Details of the corresponding provision(s) enacted/amendment introduced by the Amendment and Validation Act to remove the defects. intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tax, by invoking the Explanation to Section 3(1) of the Act of 1955, the 'normal rate' and 'routes' were required to be prescribed, but since no normal rate or routes had been prescribed, the Explanation could not come to the rescue of the respondent Authorities. This defect has been cured by introducing Section 3(1A) by way of the Amendment and Validation Act of 1997 and omitting the Explanation to Section 3(1). Section 3(1A) seeks to bring non-fare paying passengers at par with fare paying passengers, by prescribing two alternate methods to notionally determine fares or freights, when the same has not been charged, i.e. by taking into account: (a) fares or freights fixed by the competent authority, under the MV Act, or (b) fares and freights specified in Schedule I to the Act for different classes of roads and motor vehicles, the higher of the two fares has to be taken into account in every case. Further, Schedule I introduced by way of the Amendment and Validation Act of 1997 stipulates the freights and fares which would be applicable for different classes of roads and motor vehicles. Section (2gc) defining the term 'road' has also been introduced. Therefore, the vacuum ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 and Civil Appeal No. 6931 of 2009 submitted that in order to fall within the meaning of the term 'business' as defined under Section 2 (aa) of the Amendment and Validation Act of 1997, the trade, commerce, or manufacture of the assessee, or, the transactions connected therewith or incidental thereto must have some connection with the business of carrying passengers and goods by road. The main activity of the assessees would not amount to carrying on business, as the same does not relate to the activity of carrying passengers and goods by road. In a case where the main activity does not amount to 'business', then the connected, incidental or ancillary activities would also not amount to 'business' unless an independent intention to conduct business in these connected, incidental or ancillary activities is established by the revenue. In the present case, there is no material to establish that the ancillary activity of providing transport facilities to the employees and the children of the assessees-appellants herein is conducted with an independent intention to conduct business through such activity. Therefore, in the present case, neither the main activity of the appellants, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said decision would not be relevant in the facts of the present case, as an interpretation of the charging provision in the Act of 1955 as amended, would not give rise to a conclusion that a non-fare paying employee of the operator, or a school going child of such employee, is not a passenger. The term 'passenger', in the present case, has been defined under Section 2(g) of the Act in a broad sense to mean any person travelling in a motor vehicle, but shall not include the driver, conductor, or any employee of the owner of the vehicle travelling in the bonafide discharge of his duties in connection with the vehicle. The only three categories of persons who are excluded from the definition of 'passenger' are: (a) driver of the motor vehicle; (b) conductor; and (c) any employee of the owner of the vehicle travelling in the bonafide discharge of his duties in connection with the vehicle. The non-fare paying employees of the appellants and their children, would not fall under any of the said exceptions. Although, some of them are employees of the appellants, they are not travelling in the motor vehicle in discharge of duties "in connection with the vehicle", their duties may be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants-employers owing to the fact that they wish to provide free transportation to the employees and their children as a welfare measure. Therefore, we do not find any substance in the contention of the appellants that the tax was sought to be imposed on 'motor vehicles' and therefore, the same is outside the legislative competence of the State Legislature for Himachal Pradesh. It is clarified that the tax is on passengers and goods and the same has to be paid by the owners of the motor vehicles whose responsibility it is to pay. Therefore, there is no substance in the argument concerning legislative competence of the State Legislature in enacting the Act of 1955 or the Amendment and Validation Act of 1997. Summary of conclusions : 23. In the result we arrive at the following conclusions: i. The Act of 1955, as amended by the Amendment and Validation Act of 1997, is valid. The said Act seeks to impose tax on passengers and goods carried by road in motor vehicles and the Himachal Pradesh Legislative Assembly possessed the legislative competence under Article 246, read with Entry 56 of List II of the Seventh Schedule of the Constitution of India, to enact the Act of 1955 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the question is, whether, the appellants herein would be liable to pay the tax from the date when the Amendment and Validation Act of 1997 was passed or from any future date? 25. We have considered this question in the light of the fact that the appellants are public sector organisations (and not private operators) who are engaged in transporting their employees and their children to the work sites and to the school and back gratis as a facility being provided to them having regard to the location of the work sites in remote hilly terrain and to ensure the safety of the children of the employees of the appellant organisations. 26. As there has been a long passage of time since the enactment of the Amendment and Validation Act of 1997, that is about twenty-six years till date and by now there would have been replacement of the motor vehicles or buses by the appellants and their liability to pay the said taxes, being at large, and now set at rest, we think that, in exercise of our powers under Article 142 of the Constitution, the appellants should be made liable to pay the tax w.e.f. 01.04.2023, the current financial year onwards and not for the period prior thereto. One of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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