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TMI Blog1952 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses and permits for plying motor cabs, public service vehicles and public carriers for hire on different routes mentioned in their licenses. In other words, these suits are by the 'owners' of motor vehicles as defined in the 'impugned Act'. The plaintiff in Title Suit No. 3 of 1952 is one Satya Narayan Chowdhary who styles himself a member and President of the Bihar Motor Travellers' Association, resident of Ranchi, and he claims that, in course of his duties, he has to" travel a great deal by motor buses and taxis and has to transport goods by 'public carriers'. It may be mentioned here that the term 'public carriers' as used in the Act refers to vehicles and is different in its import from the meaning given to it under the Motor Vehicles Act (Act IV of 1939). He has, therefore, instituted the suit as a passenger carried by these vehicles. The principal defendant in all these suits is the State of Bihar. The plaintiffs have substantially sued for a declaration that the impugned Act is 'ultra vires' the Bihar Legislature and for permanent injunction restraining the defendant, its-servants and agents from realising any tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d obligations upon the plaintiffs of a drastic character without any corresponding advantage to them and there was no warrant in the Constitution for the imposition of such obligations on the citizens engaged in lawful avocation. 4. The defendant, on the other hand, has endeavoured to protect the Act and has asserted that the Bihar Finance Act, 1950, as also the rules framed thereunder are valid and within the competence of the respective authorities; that the tax imposed on goods and passengers carried by road, comes within Entry No. 56 of List II of the Seventh Schedule of the Constitution of India; and the fares and freights have been used merely to determine the measure of the tax which is to be collected through the owners of the vehicles concerned. The defendant also contends that the Act impugned does not in any manner offend against the provisions of the Constitution of India and is not in any way opposed to it, and that there has been no delegation of any essential legislative function. 5. On these pleadings the following issues were framed by my learned brother Das, J. for determination :- "1. Is the tax imposed by part III of the Bihar Finance Act, 1950, beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law and Section 26 for the making of rules by State Government to give effect to the provisions of the Act. 7. Both parties agree that Section 12 is the charging section and it requires very careful consideration. The first sub-section of Section 12 runs as follows: "From and after the commencement of this Act, there shall be charged, levied and paid to the State Government, a tax on all passengers carried by motor cabs, stage carriages and contract carriages and on all goods transported by public carriers at the rate of two annas in the rupee on all fares and freights payable to owners of such motor cabs, stage carriages, contract carriages or public carriers". 8. I have quoted this sub-section in full because the contentions of the parties have been focussed upon the interpretation of this provision. Evidently, this sub-section can be split up into two parts; (1) that there shall be charged, levied and paid a tax on all passengers and on all goods carried or transported by motor vehicles; and (2) that the tax levied shall be at the rate of two annas in the rupee on all fares and freights payable to owners. It is significant to note that the first part mentions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of such lump sum or on such amount as appears to the prescribed authority to be fair and equitable, and Sub-section (3) further provided that every owner shall, in the prescribed manner, pay into a Government treasury "the full amount of tax due from him" under Sub-section (1) or Sub-section (2), as the case may be, and shall furnish returns within a prescribed period. Section 13 again speaks of assessment of the amount of "tax 'due from the owner'" on the basis of certain returns. Section 14 similarly says that the State Government may permit an 'owner' under certain circumstances to compound for the "tax assessable on him" by paying, in lieu thereof, a fixed fee. It is contended with reference to these provisions that the tax due was 'a tax due from the owner' and was 'assessable on the owner'; therefore, it was urged that it was a tax on the 'owner' of these motor vehicles and not really a tax on goods and passengers carried by those vehicles. It was further argued by Mr. Baldeva Sahay followed by Dr. Sultan Ahmad that the Act nowhere provides for the recovery of the tax from the passengers or consignors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the constitutionality of the legislation should be accepted in preference to the one which has the effect of destroying it. If this construction is adopted, then there is not much difficulty in understanding the subsequent provisions of the statute which work out the manner in which the tax is to be realised through the owner's of such vehicles. The most convenient way in which a tax of this nature could be levied and realised was through the instrumentality of the owners of such motor vehicles and since they have been put in charge of it, the statute requires that they should collect and pay it to Government, submit returns of the realisations made and be subject to certain penalties in case of their omission to conform to the requirements of the law. The words, therefore, as used in the various sections of the Act, namely 'tax due from owners' or 'tax assessable on them', must in the context be understood to be tax which has been collected by these owners and thus became payable to the State Government, the collection being on behalf of the State by the "owners". 11. It is true that there is absence of a direct provision authorising the 'owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dard for assessing a provincial tax. If a tax is to be levied, on property, it will not be irrational to correlate it to the value of the property and to make some kind of annual value the basis of the tax, without intending to tax income." Here the charging section is Section 12, and Sub-section (1) of the section quite clearly provides that the tax is upon the passengers and goods and not upon the income of the owners and the fares and freights realisable by them. The fares and freights have been used merely as a standard for calculating the tax, and there is nothing irrational in doing so. This measure of the tax cannot convert it into a tax on the income of the owners themselves. Reference may also be made in this context to a passage in Willoughby on the Constitution of the United States, Vol. 2, page 669, Section 378, headed "Measurement of Taxes" where the learned author observes:-- "The courts have firmly fixed the proposition that, for the determination of the amounts of taxes to be assessed upon individual persons, corporations, or pieces of property, any reasonable standard of measurement may be selected, and that the intrinsic character of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso cast by implication a corresponding burthen on another." Here the obligation of the tax is placed on, passengers and on all goods carried by motor vehicles. There is also an obligation upon the 'owners' to pay the tax so realised to the State Government. Therefore, although the statute does not expressly authorise the owners to collect the tax from the passengers and consignors of goods, yet the statute must be construed to have implicitly granted the power and the right to the "owners" to collect the tax in order to make the statute effective. 13. Sometimes it may be even necessary to modify the language of the statute in order to give effect to its meaning. I will again refer to a passage from Maxwell at page 236:-- "Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Bom 65 at p. 76 FB where Beaumont, C J. observed: -- "If a power to impose the tax is conceded, power to collect the same is necessarily implied. The Provincial Legislature within the province being supreme there appears to be no reason why, it should not appoint or name any person to collect the tax". 15. The learned Government Pleader submits that whatever obscurity there may have been in the statute, the rules framed under Section 26 of the Act appear to have removed that obscurity. He says that what was implicit in the Act has been explicitly worked out in the Rules. For instance, Rule 9 provides that the ticket for the carriage of a passenger and his luggage in excess of the free luggage allowance shall contain certain particulars; one of those particulars specifically mentioned is "fare and 'tax', if any". Similarly, in regard to the goods' ticket, Rule 10 provides for the mention of the particulars in the ticket, one of them being 'total freight and 'tax', if any'. So does Rule 13, which relates to registers of ticket issued. To my mind, these rules indicate unmistakably that the "owner" is not technically the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess of the powers of the subordinate body to which Parliament has delegated authority to make them." and a decision of this Court in 'LIQUIDATORS PURSA LTD. v, INCOME TAX OFFICER', AIR 1952 Pat 106. I have already shown that the Act and the rules framed thereunder complement and supplement each other and fully bring out the meaning of the statute and the purpose for which it has been framed. It is true that the principle of necessary intendment should not be ordinarily extended to taxing statutes and where the question only is whether a particular item of property has or has not been taxed, the Act must expressly and unequivocally supply the answer. Where, however, as in this case, the 'vires' of the statute itself is being assailed and it is said that the statute is beyond the legislative competence of the State, the rules can be certainly called in aid in order to understand the scheme and purpose of the legislation. The first issue, therefore, must be answered in favour of the defendant, and it must be held that it was no1 beyond the legislative competence of the state Legislature to impose the tax by Part III of the Bihar Finance Act, 1950. 16. I shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign right of the Legislature because here in India the rights of the Legislature flow from the Constitution itself and are conditioned and circumscribed by the provisions of the Constitution. I have already shown that Article 23(2) of the Constitution itself saves the power of the State to impose burdens on citizens in public interest. In" 'BUTLER v. PERRY', (1916) 240 U S 328, the Supreme Court of America, while dealing with the effect of the 13th Amendment which declared that neither slavery nor involuntary servitude shall exist, observed as follows: "It introduced no novel doctrine with respect of services always treated as exceptional, and certainly was not intended to interdict enforcement of those duties which individuals owe to the State, such as services in the army, militia, on the jury etc. The great purpose in view was liberty under the protection of effective government, nor the destruction of the latter by depriving it of essential powers." Taxes have been defined to mean "burdens or charges imposed by the legislative power upon persons or property to raise money for public purposes" CCooley. Constitutional Limitations. 7th Edition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in my opinion, applies with equal force to different subjects of legislation in the same list. Taxation is not a restraint on trade unless it is discriminatory in its character and is) levied with the object of helping one person or' party against the other. The Court will, therefore, be reluctant to declare a taxing statute unconstitutional merely because it is claimed that the legislation may result in some kind of interference with trade or commerce which may be indirectly the unavoidable consequence of all taxing statutes. If the subject of the legislation is within the taxing authority of the legislature concerned, that should be sufficient to sustain it; see, for instance, 'ERR v. C. T. DOREMUS', (1919) 249 U S 86 at 89 and 'J. W. BAILEY v. DREXEL FURNITURE CO.', (1.922) 259 U S 20. The question whether a particular object of the statute is direct or indirect has to be determined by a consideration of the nature of the statute itself and the character of the act and the transaction which it affects. In the present case the statute professes and in fact is an Act to tax 'goods and passengers' and does not profess to regulate 'trade or commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1951 S C 318 at p. 323: "The short question therefore to be asked is whether the impugned Act is in pith and substance a law relating to possession and sale etc. of intoxicating liquors or whether it relates to import and export of intoxicating liquors. If the true nature and character of the legislation or its pith and substance is not import and export of intoxicating liquor but its sale and possession etc. then it is very difficult to declare the Act to be invalid. It is said that the prohibition of purchase, use, possession, transport and sale of liquor will affect its import. Even assuming that such a result may follow, the encroachment, if any, is only incidental and cannot affect the competence of the Provincial Legislature to enact the law in question." Dr. Sultan Ahmad has laid great stress on the Articles in Part XIII of the Constitution and has vehemently urged that the impugned Act is hit by the provision of that part of the Constitution. Part XIII of the Constitution deals with "Trade, commerce and intercourse with in the territory of India". It provides that such trade shall be free, and it is open to Parliament only to impose such restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EALTH OF AUSTRALIA (1936) A C 578. The learned Counsel has also relied upon a decision of the Supreme Court in 'CHINTAMANRAO v. STATE OF MADHYA PRADESH', AIR 1951 S C 118 where their Lordships dealt with the question of reasonable restriction contemplated by Article 19 (6) of the Constitution and pointed out thus: "The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word, 'reasonable' implies intelligent care and deliberation, that is the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between - the freedom guaranteed in Article 19(1) (g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality." If Article 304 applied to the case there is no doubt that this law could not be regarded as a law at all, it not having satisfied the requisites demanded under that article; and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now turn to the last issue which bears on the point of delegation. In this connection, the contention of the learned Counsel for the plaintiffs is that the Act provides that the "prescribed authority" shall determine the fair and equitable amount of tax as required by Section 12(2) of the Act. The Act also requires that the payment of tax shall be at such intervals and returns shall be furnished by such dates as the said 'authority' might prescribe. The 'prescribed authority' is further empowered under Section 13 to require the presence of the owner for the production of evidence in support of his return, and he is authorised to assess the tax due on the basis of such returns, and if he is not so satisfied about the correctness of the returns, he can compel the owner to produce further evidence in respect of the returns and assess the tax due. The Act also requires that applications for registration have to be made to the 'prescribed authority', and it is for him to grant a certificate of registration in a prescribed form, and in case the authority finds that an owner has wilfully failed to apply for registration though he was liable to pay tax, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itizen or it gave an unrestricted power to the Executive to interfere with the fundamental rights of the people. In that connection their Lordships relied upon the Supreme Court decision in 'DR. N.B. KHARE v. STATE OF DELHI'. 1950 S C R 519 where it was held that the Court must not only have regard to the nature of the restrictions imposed, but it must also have regard to the procedure by which those restrictions were imposed: and in that context they quoted the famous dictum of Kania, C. J.: "While the reasonableness of the restrictions has to be considered with regard to the exercise of the right, it does not necessarily exclude from the consideration of the Court the question of reasonableness of the procedural part of the law." 20. In that light, their Lordships examined some of the provisions of the statute impugned before them, and they observed that one of the powers conferred by the Act was the power of making an externmeiit order, and under Section 38 of the Security Act in question Government could delegate that power to any officer or authority subordinate to the State Government. "Officers or authorities subordinate to the State Government,&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental rights guaranteed under Part III of the Constitution. I have shown that this is the main object of the Legislation. Even in Khare's case, Kama, C. J. sounded a note of warning against any assumption that the Provincial Government would necessarily act improperly or without due regard to its sense of responsibility in entrusting its officers with responsible duties provided under the statute. His Lordship said: "Moreover, this whole argument is based on the assumption that the Provincial Government when making the order will not perform its duty and may abuse the provisions of the section. In my opinion, it is improper to start with such an assumption and decide the legality of an Act on that basis. Abuse of the power given by a law sometimes occurs; but the validity of the law cannot be contested because of such an apprehension." 22. The constitutional legality of the Act, therefore, could not be decided on the assumption that the prescribed authorities, or the appellate authority under the impugned Act will be some one wholly unfit to discharge those responsibilities & too lowly or humble in his rank and position to wield the powers which the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Section 26(g) says that the State Government may make rules for securing the payment oi tax and for the purpose of carrying into effect the provisions of this Part in respect of "any other matter for which there is no provision or insufficient provision in this Part for which provision is, in the opinion of the State Government, necessary for giving effect to the purposes of this Part." Apparently, this provision may be open to exception, but it is unnecessary to decide the point. In the first place, our attention has not been drawn to any specific Rule framed by the State Government which could be held to be beyond the authority of the Act. In the second place, this provision in the law is sever-able from the other provisions of the statute. 25. On a careful analysis of the arguments advanced on this question of delegation and for the reasons which i have stated above, I find it impossible to hold that the impugned Act is bad on the ground of delegation of legislative powers to the State Government, and this issue also must accordingly be decided against the plaintiffs. 26. The net result of my discussions is that the plaintiffs are not entitled to any relief. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the words must be given their full effect. The main object and intention of the Statute being clear, the draftsman's unskilful-ness, which in this case is apparent, would not, in any way, alter the situation. The criticisms that have been levelled against the language used in Sub-section (3) of Section 12 are not absolutely unjustified, because the subsection says that every owner shall pay into a Government treasury the full amount of the tax 'due from him' under Sub-section (1) or Sub-section (2) as the case may be and that he shall furnish return. Certainly, what is charged under Sub-section (1) is not a tax due from the owner, and therefore the expression 'due from him' is a very unhappy expression. But still I am not able to agrae with the counsel for the plaintiffs that the expression 'due from him' in any way nullifies the effect of the clear and the unambiguous language used in Sub-section (1). The preamble shows that a tax was to be levied on passengers and goods carried by public service vehicles and public carriers and Sub-section (1) of Section 12 gives expression to this intention in clear terms. Sub-section (1) cannot be rendered a null ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions or actings. Therefore, looking at the essential character of the tax from the legal point of view it cannot but be regarded as a tax on passengers and goods. A legislation with regard to it is certainly within the competence of the State Legislature. 35. So far as the question of delegation is concerned, the most attractive argument advanced was that the rank, status and qualification of the "prescribed authority" which has been given such wide powers under the Act have not at all been indicated in the Act and that the taxpayers can be left even at the mercy of officials of a very inferior status who may be utterly unfit to discharge the responsibilities of such an office. In this connection, I would like to quote some passages from the recent decision of the Supreme Court in 'CONSTITUTION OF INDIA AND DELHI LAWS ACT, (1912) ETC.', 1951 S C R 747. His Lordship Kania C. J. differed from the majority view in this case, and the answers which he gave are that all the three sections mentioned in the three questions are ultra vires of the Legislatures, functioning at the relevant dates, to the extent power is given to the Government (executive) to extend Acts oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know". The proper distinction the Court said was this: "The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government, There are many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and must, therefore, be a subject of inquiry and determination outside of the halls of legislation." His Lordship has further pointed" out that delegation is incidental to the exercise of all power inasmuch as it is necessary to delegate for the proper discharge of the public duties. "No public functionary can himself perform all the duties he is privileged to perform, unaided by agents and delegates, but from this circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a technical nature that all it can do is to state the broad principles and leave the details to be worked out by those who are more familiar with the subject. Again, when complex schemes of reform are to be the subject of legislation, it is difficult to bring out a self-contained and complete Act straightway, since it is not possible to foresee all the contingencies and envisage all the local requirements for which provision is to be made. Thus, some degree of flexibility becomes necessary, so as to permit constant adaptation to unknown future condition's without the necessity of having to amend the law again and again. The advantage of such a course is that it enables the delegated authority to consult interests likely to be affected by a particular law, make actual experiments when necessary, and utilize the results of its investigations and experiments in the best way possible. There may also arise emergencies and urgent situations requiring prompt action and the entrustment of large powers to authorities who have to deal with the various situations as they arise. There are examples in the Statute books of England and other countries, of laws, a reference to which will be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h legislature, and not for Courts of law, to decide." Mukherjea J. observed as follows: -- "As said already, it is within powers of Parliament or any competent legislative body when legislating within its legislative field, to confer subordinate administrative and legislative powers upon some other authority. The question is: what are the limits within which such conferment or bestowing the powers could be properly made? It is conceded by the learned Attorney-General that the legislature cannot totally abdicate its functions and invest another authority with all the powers of legislation which it possesses. Subordinate legislation, it is not disputed must operate under the control of the legislature from which it derives its authority, and, on the continuing operation of which its capacity to function rests. As was said by Dixon J. (Vide 'VICTORIA STEVEDORING AND GENERAL CONTRACTING CO. v. DIGNAN'. 46 C.L.R. 73 at p .102), 'a subordinate legislation cannot have the independent and unqualified authority which is an attribute of true legislative power". It is pointed out by this learned Judge that several legal consequences flow from this doctrine of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation if the choice of the prescribed authority is left entirely to the State Government. 38. Though the learned Government Pleader had conceded in this case that the expression 'within that State' as used in Article 304 (b) of the Constitution of India includes freedom of trade within the State, my personal view has always been that it refers to trade, commerce or intercourse between other States or the citizens living under those States, and the State or the citizens of the State which under Article 304, has the authority to impose restrictions on the freedom of trade, commerce and intercourse. This appears to be manifest from the heading of Part XIII which runs as follows:-- "Trade. Commerce and Intercourse within the territory of India". My learned brother Sarjoo Prosad J., has agreed with my view, but my learned brother Das J. differs from it. But even if the interpretation which my learned brother Das J. has put up on this Article be the correct interpretation, the position seems to be indisputable that a taxation of the nature contemplated by item 56 of the State List, does not interfere with trade or commerce. There may be some substance in the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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