1965 (9) TMI 49 - SC - Central Excise

Whether the petitioner is justified in challenging the validity of provision of of the Motor Vehicles Act, 1939? Held that - As a consequence of this conclusion, it follows that the petitioner is entitled to claim that the tax assessed against him in respect of his vehicles for the period between 26th March, 1962and the 9th September, 1964 at the enhanced rates is invalid, and that the taxing authorities concerned will have to levy the tax at the rates prescribed by the notification issued on the 30th April, 1959 under s. 3 of the principal Act as it originally stood. It is true that this result sounds very anomalous, because for the period immedeately preceding the period in question, the tax is validly recoverable at the enhanced rates, whereas for the period in question, it has to be recovered at a lower Tate; but, for this anomaly, the defective drafting of S. 2 and s. 4 of the Act is entirely responsible. Appeal partly allowed.

Issues Involved:
1. Constitutional validity of the Rajasthan Passengers and Goods Taxation (Amendment and Validation) Act, 1964.
2. Retrospective amendment of Section 3 of the principal Act.
3. Validity of tax assessments for the period between 26th March 1962 and 9th September 1964.
4. Competence of the legislature to validate earlier invalid Finance Acts.

Detailed Analysis:

1. Constitutional Validity of the Rajasthan Passengers and Goods Taxation (Amendment and Validation) Act, 1964:
The petitioner challenged the validity of the Rajasthan Passengers and Goods Taxation (Amendment and Validation) Act, 1964, arguing that it was constitutionally invalid. The Act was intended to validate earlier Finance Acts of 1961 and 1962, which had not received the President's assent as required under Article 255 of the Constitution. The court held that the Act was constitutionally valid, except for Section 4, which attempted to validate the earlier Finance Acts retrospectively without proper compliance with Article 255. The court noted, "The Legislature is incompetent to declare that the failure to comply with Art. 255 is of no consequence and, with respect, the assent of the President to such declaration also does not serve the purpose which subsequent assent by the President can serve under Art. 255."

2. Retrospective Amendment of Section 3 of the Principal Act:
Section 2 of the 1964 Act retrospectively amended Section 3 of the principal Act, adding a proviso that specified tax rates for different periods. The court upheld the validity of this retrospective amendment, stating, "It is well-recognised that the power to legislate includes the power to legislate prospectively as well as retrospectively, and in that behalf, tax legislation is no different from any other legislation."

3. Validity of Tax Assessments for the Period Between 26th March 1962 and 9th September 1964:
The court found that the tax assessments for the period between 26th March 1962 and 9th September 1964 were invalid because this period was not covered by the retrospective amendment introduced by Section 2 of the 1964 Act. The court stated, "As a consequence of this conclusion, it follows that the petitioner is entitled to claim that the tax assessed against him in respect of his vehicles for the period between 26th March, 1962 and the 9th September, 1964 at the enhanced rates is invalid."

4. Competence of the Legislature to Validate Earlier Invalid Finance Acts:
The court held that the legislature could not validate earlier invalid Finance Acts by its own legislative process. The court noted, "The Legislature, no doubt, can validate an earlier Act which is invalid by reason of non-compliance 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."

Conclusion:
The writ petition was partly allowed. The impugned orders of assessment were set aside for the period between 26th March 1962 and 9th September 1964. The assessing authorities were directed to levy proper assessments in light of the judgment. The assessment orders for the remaining period were held valid, and the petitioner's prayer to set them aside was rejected. The court directed that each party should bear its own costs.

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