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2023 (9) TMI 407 - SC - Indian LawsWhether, by enacting the Amendment and Validation Act of 1997, the Himachal Pradesh State Legislature has validly removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997? - Non-inclusion within its scope, the activity of the appellants in providing gratis transport facilities for their employees and their children, as the charging provision contained therein, namely, Section 3 (1) and the Explanation thereto were couched in very ambiguous terms - legislative competence of the Himachal Pradesh Legislative Assembly to enact the Act of 1955 and the Amendment and Validation Act of 1997. Taxability under Section 3(1-A) of the Amendment and Validation Act of 1997 - activity of the appellants of providing gratis transport facilities for their employees and their children. HELD THAT - The power of a legislature to legislate within its field, both prospectively and to a permissible extent, retrospectively, cannot be interfered with by Courts provided it is in accordance with the Constitution. It would be permissible for the legislature to remove a defect in an earlier legislation, as pointed out by a constitutional court in exercise of its powers by way of judicial review. This defect can be removed both prospectively and retrospectively by a legislative process and previous actions can also be validated. However, where a legislature merely seeks to validate the acts carried out under a previous legislation which has been struck down or rendered inoperative by a Court, by a subsequent legislation without curing the defects in such legislation, the subsequent legislation would also be ultra-vires. Such instances would amount to an attempt to legislatively overrule a Court s judgment by a legislative fiat, and would therefore be illegal and a colourable legislation. Separation of powers, as crystalised under the Indian Constitution, is characterised by division of power and functions between the legislature, executive and the judiciary, which are the three co-equal organs of the State. The doctrine also necessarily postulates that each institution has some power to regulate the functions of the others; this is in the form of the ancillary principle of checks and balances. The role of the judiciary in galvanising our constitutional machinery characterised by institutional checks and balances, lies in recognising that while due deference must be shown to the powers and actions of the other two branches of the government, the power of judicial review may be exercised to restrain unconstitutional and arbitrary exercise of power by the legislature and executive organs - Simply setting at naught a decision of a court without removing the defects pointed out in the said decision, would sound the death knell for the rule of law. The rule of law would cease to have any meaning if the legislature is at liberty to defy a judgment of a court by simply passing a validating legislation, without removing the defects forming the substratum of the judgment by use of a non-obstante clause as a technique to do so. Thus, by enacting the Amendment and Validation Act of 1997, the Himachal Pradesh State Legislature has validly removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997. Legislative competence of the Himachal Pradesh Legislative Assembly to enact the Act of 1955 and the Amendment and Validation Act of 1997, which are stated to be enacted on the strength of Article 246, read with Entry 56 of List II of the Seventh Schedule of the Constitution of India - HELD THAT - This argument appears to be a formal one as the High Court did not have an occasion to consider the aspect of legislative competence vis- -vis the impugned Act - The import of the Act of 1955, as amended by the Amendment and Validation Act of 1997, could be gathered from the Preamble which provides that it has been enacted to provide for levying a tax on passengers and goods carried by road in motor vehicles. It is therefore clear that tax is sought to be imposed on passengers and goods, carried by road in motor vehicles. It is a no brainer that such a tax falls within the legislative field governed by Entry 56 of List II of the Seventh Schedule of the Constitution, which pertains to taxes on goods and passengers carried by road and inland water ways. Simply for the reason that notices have been issued to the owners or assessment orders have been passed against the owners of the vehicles, it cannot be said that the tax is levied on the motor vehicles. If the persons carried happen to be employees of the owners of the buses, such employees should pay the tax - there are no substance in the contention of the appellants that the tax was sought to be imposed on motor vehicles and therefore, the same is outside the legislative competence of the State Legislature for Himachal Pradesh. It is clarified that the tax is on passengers and goods and the same has to be paid by the owners of the motor vehicles whose responsibility it is to pay. Therefore, there is no substance in the argument concerning legislative competence of the State Legislature in enacting the Act of 1955 or the Amendment and Validation Act of 1997. Appeal dismissed.
Issues Involved:
1. Legislative competence of the Himachal Pradesh Legislative Assembly to enact the Act of 1955 and the Amendment and Validation Act of 1997. 2. Whether the Amendment and Validation Act of 1997 validly removed the basis of the High Court's judgment dated 27 March, 1997. 3. Whether the activity of providing gratis transport facilities for employees and their children is taxable under the Amendment and Validation Act of 1997. 4. Whether the impugned judgment of the High Court calls for any interference. Summary of the Judgment: Issue 1: Legislative Competence The Himachal Pradesh Legislative Assembly had the legislative competence under Article 246, read with Entry 56 of List II of the Seventh Schedule of the Constitution of India, to enact the Himachal Pradesh Passengers and Goods Taxation Act, 1955, and the Amendment and Validation Act of 1997. The tax is imposed on passengers and goods carried by road in motor vehicles, not on the vehicles themselves. Issue 2: Validity of Amendment and Validation Act of 1997 The Amendment and Validation Act of 1997 validly removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997, by: - Enlarging the definition of 'business' to include any trade, commerce, manufacture, or concern, whether or not carried on with a profit motive. - Defining 'fare' to include sums fixed by the competent authority under the Motor Vehicles Act and sums specified in Schedule I. - Expanding the scope of 'motor vehicle' and 'owner' to cover vehicles used for carrying passengers or transporting goods in or through Himachal Pradesh. - Deleting the ambiguous Explanation to Section 3(1) and inserting Section 3 (1A), which provides methods to determine fares or freights when not charged. Issue 3: Taxability of Gratis Transport Facilities The activity of providing gratis transport facilities to employees and their children is taxable under Section 3(1-A) of the Amendment and Validation Act of 1997. The definition of 'passenger' includes non-fare paying employees and their children, as they do not fall under the exceptions of driver, conductor, or employee traveling in connection with the vehicle. Issue 4: Interference with High Court's Judgment The Supreme Court upheld the High Court's judgment, affirming the validity of the Act of 1955 as amended by the Amendment and Validation Act of 1997. However, considering the appellants are public sector organizations providing transport as a welfare measure, the Court, exercising its powers under Article 142 of the Constitution, directed that the appellants be liable to pay the tax from 01.04.2023 onwards, not for the period prior thereto. Final Order: The appeals are dismissed, and the final Orders of the Division Bench of the High Court of Himachal Pradesh, dated 11 December, 2008, and 06 May, 2009, are affirmed, subject to the clarification regarding the period of liability to pay the tax. Parties are to bear their respective costs. Pending applications, if any, stand disposed of in the aforesaid terms.
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