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1962 (4) TMI 91 - SC - Indian LawsInterpretation of Art. 301 and other connected articles relating to trade, commerce and intercourse within the territory of India, contained in Part XIII of the Constitution Held that - Provisions of the Rajasthan Motor Vehicles Taxation Act (XI of 1951) are regulatory in character and that they do not infringe the freedom enshrined in Art. 301 of the Constitution or violate the provisions of Art. 301 of the Constitution and the taxes imposed under the Act are compensatory taxes which do not binder the freedom of trade, commerce and intercourse assured by that article. Appeal dismissed.
Issues Involved:
1. Competence of the State Legislature to enact the Rajasthan Motor Vehicles Taxation Act, 1951. 2. Violation of Article 19(1)(d), (f), and (g) of the Constitution. 3. Contravention of Article 301 of the Constitution. 4. Whether the tax imposed is a reasonable restriction under Article 304(b). 5. Requirement of previous sanction of the President under Article 255. Analysis of Judgment: 1. Competence of the State Legislature: The appellants contended that the Rajasthan Motor Vehicles Taxation Act, 1951, was outside the competence of the State Legislature as its pith and substance was inter-State trade and commerce, a Union subject under Entry 42 of the Union List. The Court held that the Act was a valid exercise of the State's power under Entry 57 of the State List, which covers taxes on vehicles suitable for use on roads. It was concluded that the Act was not legislation directly on inter-State trade and commerce but on motor vehicles within the State, thus falling within the State's legislative competence. 2. Violation of Article 19(1)(d), (f), and (g): The appellants argued that the Act violated their rights under Article 19(1)(d), (f), and (g) of the Constitution. The Court noted that if the impugned sections were declared to be unreasonable restrictions on the freedom of trade, commerce, and intercourse, they would also fall under Part XIII. Therefore, it was unnecessary to decide whether taxation laws are within the reach of Article 19 independently. 3. Contravention of Article 301: The main argument was that the Act contravened Article 301 of the Constitution, which guarantees the freedom of trade, commerce, and intercourse throughout the territory of India. The Court analyzed whether the tax imposed by the Act constituted a direct and immediate restriction on the movement of trade, commerce, and intercourse. It was noted that the tax was a consolidated tax on the vehicle itself, not directly on trade or commerce. The Court concluded that regulatory measures or compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301. Thus, the Act did not violate Article 301. 4. Reasonable Restriction under Article 304(b): The appellants contended that even if the tax was considered a restriction, it was not saved by Article 304(b) as it was not a reasonable restriction in the public interest. The Court held that the tax imposed by the Act was compensatory, aimed at maintaining and constructing roads, and did not constitute an unreasonable restriction. The Court emphasized that the tax was a fair recompense for the use of the roads and thus did not violate the freedom guaranteed under Article 301. 5. Requirement of Previous Sanction of the President: The appellants argued that the Act was invalid as it was not enacted with the previous sanction of the President, as required under Article 255 of the Constitution. The Court held that since the tax was compensatory and did not constitute a restriction on trade, commerce, and intercourse, the requirement of previous sanction under Article 255 did not apply. Conclusion: The Court dismissed the appeals, holding that the Rajasthan Motor Vehicles Taxation Act, 1951, was within the legislative competence of the State, did not violate Articles 19(1)(d), (f), and (g), and did not contravene Article 301 of the Constitution. The tax was deemed a reasonable and compensatory measure, not requiring the previous sanction of the President. The judgment emphasized the importance of maintaining a balance between the autonomy of States and the unity of India, ensuring that regulatory measures facilitating trade do not impede the freedom guaranteed under the Constitution.
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