1961 (3) TMI 139 - SC - Indian Laws

Summary

Issues Involved:
1. Constitutionality of the Rajasthan Passengers and Goods Taxation Act, 1959, the Rajasthan Passengers and Goods Taxation Rules, 1959, and a notification issued under Rule 8.
2. Whether the tax is on "passengers and goods" or "fares and freights."
3. Alleged violation of Articles 301 and 304 (inter-State trade, commerce, and intercourse).
4. Alleged violation of Article 19 (unreasonable restriction on business).
5. Alleged violation of Article 14 (discrimination between road transport and railways).
6. Validity of lump sum payment provisions.
7. Extra-territorial operation of the Act.

Detailed Analysis:

1. Constitutionality of the Act, Rules, and Notification:
The petitioners challenged the constitutionality of the Rajasthan Passengers and Goods Taxation Act, 1959, the corresponding Rules, and a notification issued under Rule 8. They argued that these provisions were unconstitutional and ultra vires. The petitioners included a registered firm, its partners, and its General Manager, who held various permits for transporting passengers and goods across Rajasthan.

2. Tax on "Passengers and Goods" vs. "Fares and Freights":
The petitioners contended that the tax imposed by the Act was on "fares and freights" rather than "passengers and goods," as authorized by Entry No. 56 of the State List in Schedule VII of the Constitution. They argued that this distinction made the tax unconstitutional. However, the court held that the tax, in its pith and substance, was on passengers and goods, even though its measure was based on fares and freights. The court cited similar views from previous judgments, concluding that the charging section did not go outside Entry No. 56.

3. Violation of Articles 301 and 304:
The petitioners argued that the Act and the Rules were repugnant to Articles 301 and 304 as they restricted inter-State trade, commerce, and intercourse. The court found that the tax was limited to fares and freights proportionate to the route within the State and did not affect inter-State trade. The court concluded that the levy of tax did not offend Articles 301 and 304.

4. Violation of Article 19:
The petitioners claimed that the Act imposed an unreasonable restriction on their business, violating Article 19. The court noted that the tax was for State purposes and did not impose any unreasonable restrictions on the petitioners' business. The court found no merit in this contention.

5. Violation of Article 14:
The petitioners argued that the Act discriminated between road transport and railways, violating Article 14. The court held that the comparison with railways was not admissible as taxes on railway fares and freights were a Union subject, not available to the State Legislature. The court found no discrimination among operators of public motor vehicles using roads.

6. Validity of Lump Sum Payment Provisions:
The petitioners contended that the Act allowed an option to pay a lump sum in lieu of the tax, but the Rules and notification made this payment compulsory. The court interpreted the word "shall" in the Rules and notification as directory rather than mandatory, retaining the permissive character of the section. The court concluded that the Rules and notification were not void or contradictory to the Act. The court also found that the power to fix lump sums was not unconstitutional and that the lump sum rates were reasonable.

7. Extra-territorial Operation of the Act:
The petitioners argued that the proviso to sub-section (3) of section 3 had an extra-territorial operation, making the tax payable on fares and freights attributable to the territory of another State. The court found no adequate evidence to support this contention and rejected it.

Conclusion:
The petition was dismissed with costs, and the court upheld the constitutionality of the Rajasthan Passengers and Goods Taxation Act, 1959, the corresponding Rules, and the notification issued under Rule 8.