1968 (9) TMI 122 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of the levy of tolls at Lakhanpur, Nagrota, Banihal, and other places under the Levy of Tolls Act, 1995 B.
2. Whether the National Highways Act, 1956 repealed the Levy of Tolls Act, 1938.
3. Whether the levy of tolls is a restriction on the freedom of inter-State trade and commerce under Article 301 of the Constitution of India.
4. Competence of the State Legislature to levy tolls under Entry 59 of List II of the VIIth Schedule of the Constitution of India.
5. Distinction between a tax and a fee.

Detailed Analysis:

1. Legality of the levy of tolls at Lakhanpur, Nagrota, Banihal, and other places under the Levy of Tolls Act, 1995 B:
The petitioner argued that the levy of tolls at these locations was illegal as the National Highways Act, 1956, which vested national highways in the Union, did not authorize such levies. The State contended that the Levy of Tolls Act, 1995 B (corresponding to 1938 A.D.) was valid and within the legislative competence of the State. The court held that the levy of tolls was within the exclusive jurisdiction of the State Legislature under Entry 59 of List II of the VIIth Schedule of the Constitution of India.

2. Whether the National Highways Act, 1956 repealed the Levy of Tolls Act, 1938:
The petitioner argued that the National Highways Act, 1956, which vested national highways in the Union, repealed the Levy of Tolls Act, 1938. The court held that the National Highways Act did not repeal the Levy of Tolls Act. The passing of the National Highways Act and the vesting of national highways in the Union did not affect the validity of the Levy of Tolls Act passed by the State Legislature in 1938. The court emphasized that the term "vest" in the National Highways Act referred to the management and upkeep of the highway, not the ownership of the soil.

3. Whether the levy of tolls is a restriction on the freedom of inter-State trade and commerce under Article 301 of the Constitution of India:
The petitioner argued that the levy of tolls was a restriction on the freedom of inter-State trade and commerce and violated Article 301 of the Constitution of India. The court referred to the Supreme Court ruling in AIR 1961 SC 1480, which held that the levy of tax on passengers and goods within a State did not offend Articles 301 and 304 of the Constitution. The court concluded that the tolls levied by the State were not a restriction on inter-State trade and commerce and did not require the consent of the President under Article 304.

4. Competence of the State Legislature to levy tolls under Entry 59 of List II of the VIIth Schedule of the Constitution of India:
The State contended that the levy of tolls fell within the residuary legislative field of the State under Entry 59 of List II of the VIIth Schedule of the Constitution of India. The court upheld this contention, stating that the levy of tolls was within the exclusive competence of the State Legislature. The court emphasized that tolls were a State subject and any law passed by the State Legislature dealing with tolls was valid.

5. Distinction between a tax and a fee:
The petitioner argued that the State Government rendered no services or benefits for which it could charge any fee or tax. The court distinguished between a tax and a fee, stating that a fee is a charge for a specific service rendered, while a tax is a compulsory exaction of money by a public authority for public purposes. The court held that tolls were a form of tax and not a fee. The levy of tolls was a tax for the use of the road and did not require any specific benefit or service to be rendered by the State.

Conclusion:
The court dismissed the writ petition, holding that the levy of tolls at Lakhanpur, Nagrota, Banihal, and other places under the Levy of Tolls Act, 1995 B, was legal and within the competence of the State Legislature. The National Highways Act, 1956, did not repeal the Levy of Tolls Act, 1938. The levy of tolls did not violate Article 301 of the Constitution of India and did not require the consent of the President under Article 304. The court also clarified the distinction between a tax and a fee, stating that tolls were a form of tax and not a fee.