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TMI Blog1980 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Highway No. 1 passes through that State. The State of Haryana levies a tax on passengers and goods carried by motor vehicles, which we may call, for brevity's sake, 'passengers and goods tax'. The levy is made under the provisions of the Haryana Passengers and Goods Taxation Act 1952. Sec. 3(1) of the Act empowers the levy of a tax, to be paid to the State Government, at such rates not exceeding 60% of the value of the fare or freight as the case may be, on all passengers and goods carried by a motor vehicle other than a private carrier. In the case of contract carriages and stage carriages the State Government is authorised to accept a lump-sum in lieu of the tax chargeable on passengers and goods respectively, in the manner prescribed. Sec. 3(3) deals with situations where a route lies partly within and partly outside the State of Haryana. It reads as follows : S. 3(3). When passengers and goods are carried by a motor vehicle on a 'joint route', the tax shall be payable in respect of fare or freight for the distance covered within the State at the rate laid down in this section. Explanation : For the purpose of this sub-section, 'joint route&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89 of List I also throw light, as we will presently show and they are as follows : 22. Railways. 24. Shipping and navigation on inland waterways, declared by Parliament by law to be national waterways, as regards mechanically propelled vessels; the rule of the road on such waterways. 25. Maritime shipping and navigation, including shipping and navigation on tidal waters; provision of education and training for the mercantile marine and regulation of such education and training provided by State and other agencies. 29. Airways; aircraft and air navigation; provision of aerodromes; regulation and organisation of air traffic and of aerodromes; provision for aeronautical education and training and regulation of such education and training provided by States and other agencies. 30. Carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels. 89. Terminal taxes on goods or passengers, carried by railway, sea or air, taxes on railway fares and freights. Entry 13, Entry 56 and Entry 57 of List II are as follows : 13. Communications, that is to say, roads, bridges, ferries, and other means of commun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from combining its power to legislate with respect to any matters enumerated in Entries 1 to 96 of List I with its power to legislate under Entry 97 of List I and, so, if Entries 23 and 97 were read together, the power to legislate with respect to taxes on passengers and goods carried on National Highways was within the exclusive legislative competence of Parliament. The observation in Union of India v. H. S. Dhillon(1) on which reliance was placed by the learned counsel was : However, assuming that the Wealth Tax Act, as originally enacted, is held to be legislation under entry 86 List I, there is nothing in the Constitution to prevent Parliament from combining its powers under entry 86. List I with its powers under entry 97. There is no principle that we know of which debars Parliament from relying on the powers under specified entries 1 to 96, List I, and supplement them with the powers under entry 97 List I and art. 248, and for that matter powers under entries in the Concurrent List. The observation in Dhillon's case was quoted with approval in Satpal Co. etc. v. Lt. Governor of Delhi Ors., and a criticism that Dhillon's case was no longer good law in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Act, s. 104 has been inserted for the very purpose of enabling legislation to be enacted in respect of subjects omitted from the three Lists in the Seventh Schedule. There is not therefore the same necessity for Courts in India to find that a subject must be comprised within the entries in the Lists. But when there is a choice between two possible constructions of an entry or entries, one of which will result in legislative power being conferred by some entry or entries in the Lists and the other in a finding of no existing power, but if legislation is required that recourse must be had to s. 104, the first construction should on principles analogous to those applied to the Canadian Constitution be preferred . It is, therefore, but proper that where the competing entries are an entry in List II and entry 97 of List I, the entry in the State list must be given a broad and plentiful interpretation. Entry 56 of List II refers to taxes and goods on passengers carried by road or on inland waterways. It does not except National Highways and National Waterways, so declared by law made pursuant to Entry 23 and Entry 24 of List I. While it is to be noticed that Entries 22, 23, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan) Ltd. v. State of Rajasthan Ors., and Bolani Ores Ltd. etc. v. State of Orissa etc., it has to be held that the power exercisable under entry 56 of List II is the power to impose taxes which are in the nature of regulatory and compensatory measures. In the last of the cases mentioned it was said by the Court, Entry 57 of List II empowers legislation in respect of taxes on vehicles ......... suitable for use on roads .......... the power exercisable under Entry 57 is the power to impose taxes which are in the nature of compensatory and regulatory measures . What was said about entry 57 is true of entry 56 too. But to say that the nature of a tax is of a compensatory and regulatory nature is not to say that the measure of the tax should be proportionate to the expenditure incurred on the regulation provided and the services rendered. If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee. While in the case of a fee it may be possible to precisely identify and measure the benefits received from the Government and levy the fee according to the benefits received and the expenditure incurred, in the case of a regulator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out to us that the taxes raised under the Act were not specially ear-marked for the building or maintenance of roads. We do not think that these considerations necessarily determine whether the taxes are compensatory taxes or not. We must consider the substance of the matter . There cannot be the slightest doubt that the State of Haryana incurs considerable expenditure for the maintenance of roads and providing facilities for the transport of goods and passengers within the State of Haryana. The maintenance of highways other than the National Highways is exclusively the responsibility of the State Government. While the maintenance of National Highways is the responsibility of the Union Government, under Sec. 5 of the National Highways Act, that very provision empowers the Central Government to direct that any function in relation to the development and maintenance of a National Highway shall also be exercisable by the concerned State Government. Sec. 6 further empowers the Central Government to give directions to the State Government as to the carrying out of the provisions of the Act and Sec. 8 authorises the Central Government to enter into an agreement with the State Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission. It is now well settled that regulatory and compensatory taxes are outside the purview of Art. 301 of the Constitution. In Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan Ors., (Supra) the question arose whether the provision of the Rajasthan Motor Vehicles Taxation which authorised the levy of tax even on stage carriages which ran for the most part on a route within the State of Ajmer but had necessarily to pass through a small strip of territory in the State of Rajasthan could be said to contravene Art. 301 of the Constitution. The Court, by a majority, upheld the validity of the Rajasthan Statutory provision and observed : Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Art. 301 and such measures need not comply with the requirements of the proviso to Art. 304(b) of the Constitution . The identical question was considered in M/s. Sainik Motors, Jodhpur Ors. v. The State of Rajasthan, in connection with a similar provision in the Rajasthan Passengers and Goods Taxation Act which provided that where passengers and goods were carried by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicles did not pick up or set down passengers or goods at any place within the State of Uttar Pradesh there was no user as contemplated by Sections 4 and 5A and therefore, the taxable events had not taken place. Reliance was placed by the learned counsel on our decision in State of Mysore Ors. v. S. Sundaram Motors P. Ltd. We do not think that the case relied on by Shri Mridul is of any assistance to him. The question there was whether a motor vehicle passing through the territory of the State of Mysore and making short halts for rest, food etc. during transit on the way from Bombay to its destination in Tamil Nadu was a motor vehicle 'kept' in the State of Mysore. Our answer depended on the meaning to be given to the word 'kept', since under the Mysore Motor Vehicles Taxation Act motor vehicles had to be 'kept in the State of Mysore' if tax was to be levied. We held that the vehicles which merely passed through the State of Mysore were not kept in the State of Mysore . The language of Sections 4 and 5A of the Uttar Pradesh Motor Vehicles Taxation Act is entirely different from the language of the Mysore Act. The Uttar Pradesh tax is levied on the vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrolled by another entry in List II which is unrelated to taxing power. Shri Kapoor suggested that no taxable event occurred within the State when goods were merely transported through the State in the course of inter- state trade and commerce. The obvious answer is that the taxable event is the carrying of goods and passengers on roads within the State thereby making use of the facilities provided by the State. One of the submissions of Shri Kapoor was that Sec. 9 of the Uttar Pradesh Motor Gadi (Mal-Kar) Adhiniyam 1964 which provided for the payment of a lump-sum in lieu of the amount of tax that might be payable was hit by Art. 14 of the Constitution. He relied on a full bench decision of the High Court of Himachal Pradesh in M/s. Gainda Mal Charanji Lal v. The State of Himachal Pradesh Ors. That was a case where the Act provided for the payment of a flat lump-sum of ₹ 1500/- per annum in lieu of tax, irrespective of the freight carried or the period during which the vehicle was operated within the State. The lump-sum levy was held to be violative of Art. 14. We are not concerned with such a situation under the Uttar Pradesh Motor Gadi Mal-Kar Adhiniyam. Under Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside the State, the tax shall be payable in respect of the distance covered within the State at the rate provided in sub-section (1) ... The learned counsel contrasted the language of Sec. 3(6) of the Bihar Act with the language of the Explanation to Sec. 3(1) of the Uttar Pradesh Motor Gadi (Mal-Kar) Adhiniyam, 1964, which is as follows: Explanation I-Where goods are carried by a public goods vehicle- (a) from any place outside the State to any place outside the State; or (b) from any place within the State to any place outside the State; or (c) from any place outside the State to any place within the State; an amount bearing the same proportion ....................... . The omission of a clause similar to clause (a) of Explanation I to Sec. 3(1) of the Uttar Pradesh Motor Gadi (Mal-Kar) Adhiniyam, 1964, according to the learned counsel, made it clear that tax was not leviable where passengers or goods were carried from any place outside the State to any place outside the State merely because the vehicle passed through the State of Bihar. Reliance was placed by the learned counsel on a decision of the Allahabad High Court in Pritpal Singh v. State of U.P. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rashtra, West Bengal, Punjab, Haryana, Karnataka, Bihar, Madhya Pradesh, Rajathan, Orissa, no other points were raised but the relevant provisions of the Motor, Vehicles Taxation Acts and the Taxation on Passengers and Goods Acts in force in the several States were brought to our notice and similar submissions as those discussed by us were made. In the result all the Civil Appeals, Special Leave Petitions and Writ Petitions are dismissed with costs. In some of the Writ Petitions proper Court fee has not been paid. However, we are not dismissing the Writ Petitions on that ground. The Order of the Court in W.P. No. 5845 of 1980 was delivered on 13th January, 1981 by CHINNAPPA REDDY, J. This Writ Petition is really covered by the judgment pronounced by us on December 15, 1980, in M/s. International Tourist Corporation etc. etc. v. The State of Haryana Ors. Shri S. N. Kacker, learned counsel, however, urged that there was no material before us in that case to justify a conclusion that the State Government incurred any expenditure in connection with the National Highways to justify imposition of a tax of a compensatory and regulatory nature. He invited our attention to the budget o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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