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2001 (12) TMI 863 - SC - Indian LawsChallenged the validity of Notification issued by the State Government - Imposition of a tax - operators of tourist buses - scheme governed by the Permit Rules - Principle of promissory estoppel - violation of Article 301 - expression arbitrarily . HELD THAT - It is the stand of the appellants that what is ruled out by application of Rule 1(4) of the Permit Rules has been indirectly brought into force. Reference has been made to Rule 84 of the Central Rules to submit that the levy which is permitted in terms of that rule is clearly excluded of its application. This plea is equally without any substance as Rule 84 states that the liability to pay taxes under the law does not cease merely on account of obtaining a tourist permit. Said rule is not a substantive charging provision as far as levy is concerned. The power to levy tax to reduce or exempt the tax and to withdraw concession granted did not have its source in Rule 84 but are clearly founded on the taxing statutes i.e. Taxation Act. It is nobody s case that State is authorized to levy or collect taxes only by operation of Rule 84. The principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or affect a legal relationship to arise in the future knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party the promise or representation would be binding on the party making it and he would not be entitled to go back upon it if it would be inequitable to allow him to do so having regard to the dealings which have been taken place between the parties. The doctrine of promissory estoppel is now well established one in the field of administrative law. We may note here that though arguments were advanced in the background of Article 301 of the Constitution as has been rightly submitted by the learned counsel for the State of Andhra Pradesh there were no pleadings in this regard in the writ petitions excepting some general statements about violation of Article 301. It has been fairly considered that President s assent as required has been obtained. Thus the case is not relatable to Article 301 but Article 304. With reference to clause (b) of the said Article it is submitted that mere obtaining assent is not sufficient and it has to be shown that the levy was in public interest. There was no averment in the petitions before the High Court in this regard. There was also no view expressed by the High Court on this issue in the absence of any argument or plea before it. The question whether public interest was involved or not required a factual adjudication. Since there were no pleadings the State did not have an opportunity to indicate its stand. Thus we do not think it appropriate to consider that question for the first time in these appeals particularly when factual adjudication would be necessary. Coming to the plea relating to repeal of the Notification it is to be noted that the Notification dated 1.7.1995 was issued in exercise of powers conferred under Section 9(1)(a) of the Taxation Act while the impugned Notification was issued in exercise of powers conferred under Section 9(1)(6) of the said Act. It is to be noted that originally Notification was issued under Section 3 of the said Act and its operation has not been questioned. That being the position there was no requirement to issue a fresh Notification to make the levy. Notification dated 1.7.1995 did not supersede the original Notification issued under Section 3 of the Taxation Act. In the result the appeals are dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Constitutionality and Legislative Competence The legal framework involves the Andhra Pradesh Motor Vehicles Taxation Act, 1963, and the Motor Vehicles Act, 1988. The Court examined whether the State Legislature had the competence to issue the Notification under Entry 57 of List II of the Seventh Schedule, which deals with taxes on vehicles, subject to Entry 35 of List III. The Court concluded that the State Legislature was competent to levy taxes on vehicles, and the Notification was within its legislative competence. Issue 2: Binding Nature of Central Directives The appellants argued that the Central Government's directives were binding under Articles 73, 256, and 257 of the Constitution. However, the Court found that the letter dated 30th August 1993 from the Joint Secretary to the Government of India was not a directive but a request, and thus not binding on the State. Articles 73, 256, and 257 did not apply as there was no law made by Parliament that the State was required to comply with. Issue 3: Promissory Estoppel The appellants invoked the doctrine of promissory estoppel, arguing that the withdrawal of concessional tax rates was arbitrary. The Court held that promissory estoppel cannot be used to compel the Government to carry out a representation or promise that is contrary to law or public interest. The Court cited precedents to establish that the Government can withdraw concessions if public interest demands it, and the doctrine of promissory estoppel cannot override statutory provisions. Issue 4: Violation of Article 301 The Court considered whether the impugned Notification violated Article 301, which ensures freedom of trade, commerce, and intercourse. The Court referred to the Automobile Transport case, stating that regulatory measures or compensatory taxes do not impede trade and commerce. The Court found that the tax was compensatory and did not directly hinder trade, thus not violating Article 301. The absence of specific pleadings on this issue in the writ petitions was also noted. Issue 5: Arbitrariness and Relevant Consideration The appellants contended that the withdrawal of the concessional tax was arbitrary. The Court clarified that arbitrary action must be manifestly unreasonable to be struck down. It found that the tax applied equally to all operators, whether from Andhra Pradesh or other states, and thus was not discriminatory or arbitrary. 3. SIGNIFICANT HOLDINGS The Court upheld the validity of the Notification dated 5.6.2000, dismissing the appeals. Key principles established include:
The appeals were dismissed, affirming the High Court's judgment and validating the State's legislative actions.
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