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TMI Blog2023 (9) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... endment 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1-A) of the Amendment and Validation Act of 1997. Brief facts of the case: 3. Since the controversy involved in these appeals is identical, the appeals are being disposed of by way of this common judgment. For the sake of convenience, the facts of the lead matter, i.e., Civil Appeal No. 3498 of 2009 shall be narrated as under: 3.1. The facts in a nutshell are that the Act of 1955 was enacted by the Himachal Pradesh Legislative Assembly with a view to levy tax on passengers and goods carried by road in certain motor vehicles in the State of Himachal Pradesh. The said Act received Presidential assent on 25 November, 1955. 3.2. The appellant, NHPC Ltd. is engaged in the generation of electricity and has various projects in the State of Himachal Pradesh. Many project sites are situated at different locations in the interiors of Himachal Pradesh. These work sites are not properly serviced by any public transport system or regular taxis. The residential colonies of the staff employed at the various project sites are located at far of distances from the project sites. Therefore, as a welfare measure, the appellant, NHPC Ltd. provides transport facilities to its employees in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1955 was to be levied only on fare-paying passengers against tickets issued by the owner of the motor vehicles, who is engaged in the business of carrying passengers for hire and reward. ii. That no rate or fare had been specified by the competent authority under the Motor Vehicles Act, 1939 (hereinafter referred to as "MV Act" for short) for the routes on which the appellant's buses plied, nor had any contractual rate been agreed upon between the appellants and its employees. Therefore, the charging provision, i.e., Section 3 (1) of the Act of 1955 and the Explanation thereto would not be attracted. iii. That in passing the Assessment Orders dated 01 October, 1992, erroneous and baseless assumptions had been made to the effect that every bus of the appellant, NHPC Ltd. was plying on every day of the relevant year; a passenger travelled on every seat of every bus; every employee travelled the full distance shown in the logbook; and every passenger was paying a fare of Rs. 1.15 per kilometer. iv. That even if the assessee was liable to pay tax under the Act of 1955, they would not be liable to pay surcharge under Section 3A of the Act as the said provision would not be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined under the Motor Vehicles Act, 1988 (hereinafter, "MV Act, 1988" for the sake of convenience) means "a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle." That although the said definition of 'motor vehicle' would cover the buses of the appellant, the Explanation to Section 3 (1) of the Act of 1955 would not permit such an application. v. That the Explanation to Section 3 (1) of the Act of 1955 introduced a legal fiction requiring assessments to be made on the assumption that even passengers who did not actually pay a fare, were being carried at the normal rate chargeable on the concerned route. That there was no definition of 'route' for the purposes of the Act and the definition of 'route' under the MV Act could not be referred to as the routes on which the appellant's buses plied were not 'routes' in the sense defined under the MV Act. Hence, 'route' could not be equated to any 'road' so as to hold the appellant-assessee liable to pay tax under the Act of 1955. That for charging tax, by invoking the Explanation to Section 3(1), routes were required to be prescribed, but since no routes had been prescribed, the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contrary to Entry 56, List II of Seventh Schedule of the Constitution of India. ii. That the definitions of 'passenger', 'business', 'fare' and 'road' are artificial and unnatural, as also contrary to the purpose and object of the Act and hence, ultra-vires. iii. That employees of the appellant and their children would not be covered by the definition of "passenger", as appearing in the Amendment and Validation Act of 1997, inasmuch as they are carried free of charge. 3.11. By the impugned judgment dated 11 December, 2008, the High Court of Himachal Pradesh dismissed Civil Writ Petition No. 725 of 1998 filed by the appellant and upheld the vires of the Act of 1955 as amended from time to time, particularly by the Amendment and Validation Act of 1997. The pertinent findings of the Division Bench of the High Court may be epitomized as under: i. The Court did not find favour with the contention of the Petitioner that the impugned legislations had the effect of taxing the vehicles, carrying passengers or goods and, hence, the State Legislature does not have the competence to enact it. It was held that from a reading of the Preamble of the Act and also various provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Senior Counsel along with instructing counsel for the appellant(s) in Civil Appeal No. 3948 of 2009; Sri Yashraj Singh Deora, learned counsel for the appellant(s) in Civil Appeal Nos. 4738-4743 of 2009 and Civil Appela No. 6931 of 2009 and Sri Anup Kumar Rattan, learned Advocate General for the State of Himachal Pradesh along with instructing counsel. We have perused the material on record. 4.1. Learned Senior Counsel Sri Upadhyay, appearing on behalf of the appellant(s) in Civil Appeal No. 3948 of 2009 submitted as under: i. That the impugned judgment of the High Court of Himachal Pradesh has not properly appreciated the import of the Amendments made to the Act of 1955 by way of the Amendment and Validation Act of 1997 inasmuch as the High Court has upheld the said Act of 1997, by losing sight of the fact that the said Act does not remove the basis of the judgment passed by the High Court earlier, by which, the Explanation to Section 3 (1) of the Act of 1955 was deleted and the further amendments were made by inclusion of Section 3 (1A) and certain other provisions. That the High Court has proceeded on a misplaced interpretation of the Act of 1955, as amended by the Amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring out the differences between a tax on the income of the operators vis-à-vis passenger tax. That in the present case the incidence of the tax is on the appellants who are the owners of the buses, and not on the passengers. The appellants' role in the present case cannot be to collect the tax from the passengers and deposit the same with the Respondent Authorities as no fare is collected from the passengers, but to still discharge the tax liability out of their own coffers. iv. That fundamentally, 'passenger' means a person who travels by paying a fare to the owner or operator of the vehicle, vide M/s Tata Engineering and Locomotive Co. vs. The Sales Tax Officer, Poona, A.I.R. 1979 SC 343. Therefore, a non-fare paying employee of the operator, or a school-going child of such employee, is not a passenger within the meaning of the constitutional entry. v. That the Amendment and Validation Act of 1997 had introduced sub-clauses (ii) and (iii) to Section 2 (aa) of the Act which defines 'business'. That the said sub-clauses are brought within the scope of the term 'business': a) any trade, commerce, or manufacture, or any adventure or concern in the nature of trade, comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the same from being declared to be unconstitutional. ix. That the Amendment and Validation Act of 1997 did not remove the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997, by curing the defects and plugging the lacunae in the Act of 1955. Rather, it has been enacted with the oblique motive of destroying the finality, force and effect of the said judgment of the High Court, which has been affirmed by this Court. 4.2. Sri Yashraj Singh Deora, learned counsel for the appellants in Civil Appeal Nos. 4738-4743 of 2009 and Civil Appeal No. 6931 of 2009 adopted the submissions of learned Senior Counsel Sri Upadhyay and further contended as under: i. That in order to be covered under the definition of 'business' provided under the Amendment and Validation Act of 1997, the trade, commerce, manufacture of the assessee, or the transactions connected therewith or incidental thereto must have some connection with the business of carrying passengers and goods by road. When the term 'business' is construed in such a manner, the main activities of the respective appellants, would not amount to carrying on business, as the same do not relate to the activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court had proceeded to pass the impugned orders on a sound appreciation of the facts of the matter and the applicable law and the same would not call for any interference by this Court. It was further contended as under: i. That the Amendment and Validation Act of 1997 has validly addressed the deficiencies in various provisions of the Act of 1955 and has therefore removed the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997 in accordance with law. That it is trite that if a law passed by a Legislature is struck down or rendered inoperative by a Court, the competent Legislature can correct the infirmities which formed the basis of the Court's decision to strike down the law and make such amended law effective retrospectively, vide M/s West Ramnad Electric Distribution Co. vs. State of Madras, A.I.R. 1962 SC 1753; Rai Ramkrishna vs. State of Bihar, A.I.R. 1963 SC 1667; Lohia Machines Ltd. vs. Union of India, (1985) 2 SCC 197; State of Himachal Pradesh vs. Yash Pal Garg, (2003) 9 SCC 92; Baharul Islam vs. Indian Medical Association, 2023 SCC OnLine SC 79. ii. That Section 3 (1A) as incorporated by the Amendment and Validation Act of 1997, provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 'business'. 'The term 'business' was defined in a narrow manner in the Act of 1955 and meant the business of carriage of passengers and goods. Therefore, when the definitions of the terms 'motor vehicle' and 'business' were read into the charging provision, the inference was, only those who were not in the business of carrying passengers and goods, would not be covered by the charging provision. This loophole has also been plugged by way of the Amendment and Validation Act of 1997, inasmuch as the definition of 'business' has been enlarged and it now includes, besides the business of carrying passengers and goods by motor vehicles, any trade, commerce or manufacture, or any adventure or concern, whether or not the same is carried on with a profit motive; and any transaction in connection with, incidental or ancillary to such trade, commerce or manufacture. That 'business' now means just any business, carried on with or without a profit motive, or any ancillary transactions in connection with such business. The said expression having being widened, a macro meaning and interpretation must be given to the same, was the submission. iv. That simply for the reason that notices had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hire or reward even in contravention of the provisions of the MV Act. Section 2 (aa) of the Act of 1955 defined 'business' to mean the business of carrying passengers and goods by motor vehicles. Section 2 (g) defined 'passenger' to mean any person travelling in a motor vehicle, but did not include the driver or conductor or any employee of the owner of the vehicle travelling in bona fide discharge of his duties in connection with the vehicle. The term 'owner' was defined under Section 2 (f) to mean the owner of the motor vehicle in respect of which a permit had been granted or countersigned under the provisions of the Motor Vehicles Act, 1939. 7.2. Section 3 (1) which was and still is the charging provision provided that a tax shall be levied and charged by the State Government on all fares and freights in respect of all passengers carried and goods transported by motor vehicles, at such rates not exceeding one-sixth of the value of the fare or freight, as the Government may, by notification, direct. The charging provision contained an Explanation which read as under: "When passengers are carried and goods are transported by a motor vehicle, and no fare or freight, whether ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Himachal Pradesh. v. The following provisions defining the terms 'private service vehicle', 'road', and 'transport vehicle' were introduced by way of the Amendment and Validation Act of 1997: "2(gb) "private service vehicle" means a motor vehicle constructed or adapted to carry more than six persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with his trade or business;" "2(gc) "road" means a track for travel or transportation to and fro, serving as a means of communication, between two places;" "2(ia) "transport vehicle" means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle;" vi. Sub-section (IA) has been added to Section 3 of the Act of 1955 and the Explanation to Section 3 (1) has been deleted. Section 3(1A) provides that notwithstanding anything contained in sub-section (1) of Section 3, when passengers are carried and goods are transported by a motor vehicle and no fare or freight, whether chargeable or not, has been charged or fare or freight has been charged at a concessional rate, the tax at the rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " or "freight includes sums fixed by the competent authority under the Motor Vehicles Act for the hire of motor vehicles for carriage of passengers and the transport of goods therein and includes the sum payable for a season ticket, and where no such fare or freight has been fixed, also includes such sum as specified in Schedule-1: Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 Definition of the term 'motor vehicle' 2(e) "motor vehicle" means a public service vehicle or public carrier, or private carrier or a trailer when attached to any such vehicle; 2(d) "motor vehicle" means any transport vehicle, which is mechanically propelled and adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source, or a trailer when attached to any such vehicle and includes- (i) A motor vehicle used for carriage of passengers or goods or both for hire or reward in contravention of the provisions of the Motor Vehicles Act; and (ii) A maxi cab, which is constructed or adapted to carry more than six passengers, but not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gers and Goods Taxation (Amendment and Validation) Act, 1997 goods transported by motor vehicles at such rates not exceeding one sixth of the value of the fare or freight, as the case may be, and as the Government may, by notification, direct, subject to a minimum of five paise in any one case, the amount of tax being calculated to the nearest multiple of five paise by ignoring two paise or less and counting more than two paise as five paise.] * On all fares in respect of all passengers carried by motor vehicles at such rates not exceeding fifty percent of the value of freight, and on all freights in respect of all goods transported by motor vehicles at such rates not exceeding five percent of the value of freight, Explanation:- When passengers are carried and goods are transported by a motor vehicle and no fare or freight, whether chargeable or not has been charged the tax shall be levied and paid as if such passengers were carried or good transported at the normal rate prevalent on the route. (2) Where any fare or freight charged is a lump sum paid by a person on account of a season ticket or as subscription or contribution for any privilege, right or facility which is comb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly: Provided further that every notification amending Schedule-1, shall be laid on the Table of the Legislative Assembly.] (2) Where any fare or freight charged is a lump sum paid by a person on account of a season ticket or as subscription or contribution for any privilege, right or facility which is combined with the right of such person being carried or his goods transported by a motor vehicle, without any further payment or at a reduced charge, the tax shall be levied on the amount of such lump sum Parameters The Himachal Pradesh Passengers and Goods Taxation Act, 1955 The Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997 or on such amount as appears to the prescribed authority to be fair and equitable having regard to the fare or freight fixed by a competent authority under the Motor Vehicles Act, 4 [1988]. (2-A). Where a motor vehicle plies for hire or reward in contravention of the provisions of the Motor Vehicles Act, 1988 the owner of such vehicle shall, without, prejudice to any action which is or may be taken under that Act, be liable to pay tax at the rate specified in sub-section (1) or such amount of fares and freights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this 'Act'), shall be deemed to be a valid action or thing had been made, taken or done under the provisions of the said Act as amended by this Act and accordingly i) the aforesaid tax assessed, levied, charged, paid or collected or purporting to have been assessed, levied, charged, paid or collected under the provisions of the said Act, before the commencement of this Act shall be deemed to be and always be deemed to have been validly assessed, levied, charged, paid or collected in accordance with law: (ii) no suit or other proceeding shall be maintained or continued in any court or before any authority for the refund of, and no enforcement shall be made by any court or authority of any decree or order directing the refund of any such aforesaid tax, which has been collected; (iii) recoveries, if any, shall be made in accordance with the provision of the said act of all amounts which would have been collected thereunder as such aforesaid tax if this Act had been in force at all material times; and (iv) anything done or any action taken (including any rule or order made, notification issued or direction given or exemption granted or penalty imposed) under the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imposition of a tax by passing a suitable Legislation, by amending the relevant provisions of the statute concerned with retrospective effect, thus taking away the basis on which the decision of the court has been rendered and by enacting an appropriate provision validating the levy and collection of tax made before the decision in question was rendered. In that decision, reliance was placed on Shri Prithvi Cotton Mills Ltd. vs. Broach Borough Municipality, A.I.R 1970 SC 192, a Constitution Bench decision of this Court, which has laid down the requirements which a validating law should satisfy in order to validate the levy and collection of a tax which has been declared earlier by a court as illegal. The relevant portion of the said judgment reads as under: "When a Legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the Legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the above decisions the following salient principles would emerge: (1) The adjudication of the rights of the parties is the essential judicial function. Legislature has to lay down the norms of conduct or rules which will govern the parties and the transaction and require the court to give effect to them; (2) The Constitution has delineated delicate balance in the exercise of the sovereign power by the Legislature, Executive and Judiciary; (3) In a democracy governed by rule of law, the Legislature exercises the power under Articles 245 and 246 and other companion Articles read with the entries in the respective Lists in the Seventh Schedule to make the law which includes power to amend the law. (4) The Court, therefore, need to carefully scan the law to find out: (a) whether the vice pointed out by the Court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the Legislature has competence to validate the law; (c) whether such validation is consistent with the rights guaranteed in Part III of the Constitution. (5) The Court does not have the power to validate an invalid law or to legalise impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dictum. The legislature cannot, by way of an enactment, declare a decision of the court as erroneous or a nullity, but can amend the statute or the provision so as to make it applicable to the past. The legislature has the power to rectify, through an amendment, a defect in law noticed in the enactment and even highlighted in the decision of the court. This plenary power to bring the statute in conformity with the legislative intent and correct the flaw pointed out by the court can have a curative and neutralizing effect. When such a correction is made, the purpose behind the same is not to overrule the decision of the court or encroach upon the judicial turf, but simply enact a fresh law with retrospective effect to alter the foundation and meaning of the legislation and to remove the base on which the judgment is founded. This does not amount to statutory overruling by the legislature. In this manner, the earlier decision of the court becomes nonexistent and unenforceable for interpretation of the new legislation. No doubt, the new legislation can be tested and challenged on its own merits and on the question whether the legislature possesses the competence to legislate on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the judgment is founded. The order of the High Court, inter alia, holding that the amended provisions did not usurp the judicial power was upheld. vii. In Madras Bar Association vs. Union of India, (2022) 12 SCC 455, L. Nageswara Rao J., speaking for the majority (2:1) laid down the following principles, as regards the permissibility of abrogation, to remove the basis of a judgment: "43. The permissibility of a legislative override in this country should be in accordance with the principles laid down by this Court in the aforementioned as well as other judgments, which have been culled out as under: a) The effect of the judgments of the Court can be nullified by a legislative act removing the basis of the judgment. Such law can be retrospective. Retrospective amendment should be reasonable and not arbitrary and must not be violative of the fundamental rights guaranteed under the Constitution. (Lohia Machines Ltd. and Anr. v. Union of India and Ors., (1985) 2 SCC 1987). b) The test for determining the validity of a validating legislation is that the judgment pointing out the defect would not have been passed, if the altered position as sought to be brought in by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution of India." 11. What follows from the aforesaid judicial precedent is, a legislature cannot directly set aside a judicial decision. However, when a competent legislature retrospectively removes the substratum or foundation of a judgment to make the decision ineffective, the same is a valid legislative exercise provided it does not transgress on any other constitutional limitation. Such a legislative device which removes the vice in the previous legislation which has been declared unconstitutional is not considered to be an encroachment on judicial power but an instance of abrogation recognised under the Constitution of India. The decisions referred to above, manifestly show that it is open to the legislature to alter the law retrospectively, provided the alteration is made in such a manner that it would no more be possible for the Court to arrive at the same verdict. In other words, the very premise of the earlier judgment should be removed, thereby resulting in a fundamental change of the circumstances upon which it was founded. 12. The power of a legislature to legislate within its field, both prospectively and to a permissible extent, retrospectively, cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Amendment and Validation Act of 1997 was enacted, must be cured by way of the amendments introduced retrospectively. 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. 14. The legislative device of abrogation by enacting retrospective amendments to a legislation, as a means to remove the basis of a judgment and validate the legislation set aside or declared inoperative by a Court, must be employed only with a view to bring the law in line with the judicial pronouncement. Abrogation is not a device to circumvent any and all unfavourable judicial decisions. If enacted solely with the intention to defy judicial pronouncement, such an amendment Act may be declared to be ultra-vires and as a piece of 'colourable legislation.' The device of abrogation, by way of introducing retrospective amendments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to include within its scope the activity of the appellants of providing transport facilities for their employees and their children, as the charging provision contained therein, i.e., Section 3 (1) and the Explanation thereto was crouched in ambiguous terms. 16.1. The defects identified by the High Court in its judgment dated 27 March, 1997 are as under: i. The High Court observed that the levy of tax on passengers was only on certain motor vehicles and the provisions of the Act were not applicable to entities, such as, appellants herein. This was on a reading of a definition of 'motor vehicle' and 'owner' as found in the Act of 1955. Further, the definitions of 'motor vehicle' as well as the definition of 'passenger' were restricted as a result, the buses owned by the appellants used for carriage of the appellant's employees and their children gratis were not covered within the charging section. Also, the definition of 'transport vehicle' was restricted. ii. Explanation to Section 3 (1) of the Act of 1955 introduced a legal fiction requiring assessments to be made on the assumption that even passengers who did not pay a fare, were being carried at the 'normal rate' chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the corresponding provision(s) enacted/amendment introduced by the Amendment and Validation Act to remove the defects. 1. The term 'business' was defined in a narrow manner in the Act of 1955 and meant the business of carriage of passengers and goods. The definition of 'business' has been enlarged by way of the Amendment and Validation Act and it now includes, besides the business of carrying passengers and goods by motor vehicles, any trade, commerce or manufacture, or any adventure or concern whether Sl. No. Defects identified in the Act of 1955 by the Division Bench of the High Court in the judgment dated 27 March, 1997. Details of the corresponding provision(s) enacted/amendment introduced by the Amendment and Validation Act to remove the defects. or not the same is carried on with a profit motive; and any transaction in connection with, incidental or ancillary to such trade, commerce or manufacture. 2. The expression 'fare' included sums payable for a season ticket in respect of the hire of contract carriage. It did not include a case where no fare or freight was charged from a passenger. In Section 2(c) of the Amendment and Validation Act, fare or frei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Bench of the High Court in the judgment dated 27 March, 1997. Details of the corresponding provision(s) enacted/amendment introduced by the Amendment and Validation Act to remove the defects. motor vehicles. The higher of the two fares is to be adopted in every case. ii. Schedule I to the Amendment and Validation Act prescribes the fare and freight for different categories of motor vehicles, for different roads. iii. Section (2gc) defining the term 'road' has been introduced. 16.3. It is evident from the table presented hereinabove that the defects identified by the Division Bench of the High Court in the judgment dated 27 March, 1997, forming the basis for its decision to the effect that the provisions of the Act would not be applicable to the assesseesappellants herein, have been cured by the Amendment and Validation Act of 1997. The manner in which the defects have been cured, may be explained as follows: i. The High Court had observed that for charging tax, by invoking the Explanation to Section 3(1) of the Act of 1955, the 'normal rate' and 'routes' were required to be prescribed, but since no normal rate or routes had been prescribed, the Explanation could not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. The High Court had further held that the intention of the State legislature was to make the Act of 1955 applicable only to persons who carried on the business of transport. That the definition of 'owner' would fortify such finding, as 'owner' was defined to be a person holding a permit under the Motor Vehicles Act. However, the scope of term 'owner' has been enlarged by way of the Amendment and Validation Act of 1997, to mean the owner of the motor vehicle used for carrying passengers or transporting goods in or through the territory of the State of Himachal Pradesh. Therefore, this defect has also been cured. 16.4. In light of the aforesaid discussion, we hold that 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. 17. Sri Yashraj Singh Deora, learned counsel for the appellants in Civil Appeal Nos. 4738-4743 of 2009 and Civil Appeal No. 6931 of 2009 submitted that in order to fall within the meaning of the term 'business' as defined under Section 2 (aa) of the Amendment and Validation Act of 1997, the trade, commerce, or man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. It is also submitted, with respect to the term 'passenger' that fundamentally, 'passenger' means a person who travels by paying a fare to the owner or operator of the vehicle, vide M/s Tata Engineering and Locomotive Co. (supra). Therefore, a non-fare paying employee of the operator, or a school going child of such employee, is not a passenger. The said submission would also not come to the aid of the appellants. The meaning of the term 'passenger' would have to be gathered in every case, having regard to the definition of the said term in the relevant statute. The decision of this Court in M/s Tata Engineering and Locomotive Co. (supra) would be of no assistance to the appellants in this regard, as the said judgment turns on its own facts. In the said case, this Court while referring to the charging provision contained in the Bombay Motor Vehicles (Taxation of Passengers) Act, held that nonfare paying passengers would not fall within the purview of the said Act. The said decision would not be relevant in the facts of the present case, as an interpretation of the charging provision in the Act of 1955 as amended, would not give rise to a conclusion that a non-fare paying employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays." 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. When the employer, i.e., the owner of the vehicle, does not collect the tax from such employees, he should himself pay it, in discharge of the employer's statutory duty as an agent of the State to collect tax on the basis of the amended provision. Whether to collect the tax payable from the passengers (the employees and their children) or discharge the liability itself is the prerogative of the appellants. The incidence of the tax continues to be on the passengers who travel in the buses or other vehicles of the appellants irrespective of whether they travel gratis or are paying any fare. The impact or burden of the tax however, has been assumed by the appellants-employers owing to the fact that they wish to provide free transportation to the employees and their children as a welfare measure. Therefore, we do not find any substance in the contention of the appellants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was enacted by the legislature of the State of Himachal Pradesh. The amendments were unsuccessfully challenged by the appellants herein by filing writ petitions before the High Court. The impugned orders of the High Court of Himachal Pradesh were passed in December 2008 and July, 2009. The Special Leave Petitions filed before this Court were converted to Civil Appeals as leave was granted in them. This Court has now upheld the Amendments made to the Act of 1955 by virtue of the Amendment and Validation Act of 1997 and affirmed the judgment of the High Court of Himachal Pradesh. Therefore, the question is from when the appellants herein would have to pay the tax as prior to 1997 they were successful in assailing the Act of 1955 and it was only thereafter that the Amendment and Validation Act of 1997 was passed by the legislature of the State of Himachal Pradesh. That was also challenged by the appellants herein and the controversy has now finally been set at rest. Therefore, the question is, whether, the appellants herein would be liable to pay the tax from the date when the Amendment and Validation Act of 1997 was passed or from any future date? 25. We have considered this questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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