Motor transport operators challenged a surcharge on fares and freights imposed by an Andhra Pradesh validating Act as violating Articles 301, 304(b), 19(1)(g) and 14. The court held the restrictions reasonable and in public interest, and no Art. 14 discrimination arose; appeals were dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
52
A
NAZEERIA MOTOR SERVICE ETC. ETC.
v.
STATE OF ANDHRA PRADESH & ANR.
August 21, 1969
(J. C. SHAH,ACTING C.J., V. RAMASWAMI AND A. N. GROVER, B JJ.J
Constitution of India, Arts, 301, 304(b) and 19(l)(g) and Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) An1endn1ent a11d Validatio11 Act XXXIV of 196!-Constit1o!io11a/ity of fares and freights imposed by the Act.
The appellants, motor transport operators, challenged the increase in surcharge of the fares and f:><ights imposed by the Andhra Pradesh Motor Vehicles (Taxation of Pas5"ngers and Goods) Amendment and Validation Act, 1961. They uraed : (i) the Act was neither rel!Ulalory nor compensa· tory in nature and it fell directly within the mischief of Art. 301 of the Constitution; (ii) the imposts exceeded the limils of permissible reasonableness, were not in the public interest and. therefore. violated Arts. 304(b) and 19(1)(g); and (iii) the Act violated Art. 14 (a) inasmuch as it had not been made applicable to the Telegana area although it was appli. able to the Andhra area and (b) the vehicles on inter-State routes on permits granted by other States h;:d not bc·on subjected to tax.
HELD : · (i) It was not the contentio;1 of the State that the i'lpugned Act imposed a tax by way of a regulatory or compensatory measure. There· fore, it had to be cen \Vhether the restrictions imposed were reasonr.ble,.. and in the public interest within the n1eaning of Art. 304(b); these questions were open to examination by the court notwithstanding the fact that the sanction of the Preident was obtained :n- compliance with the ArfcJe. [55 E-FJ
Mathurai Pii/ay v. S:ate of Madras. (1954) I M.L.J. 110, Automobile Tran.roort (Raia<tlwn) Ltd. v. Stat.e of Rajasthan & Ors. [1963] I S.C.R. 49-1, Khyerbari Tea Co. Ltd. & Anr. v. State of Assam. [1964] 5 · S.C.R. 975 and Atiahari Tea Co. Ltd. , .. State of Asram, [1961] 1 S.C.R. 809, referred to.
(ii) There was no material which would justify the view that the tax \Vhich had been imposed exceeded the limit of permissible re.asonabI~ness or was not in the public intest. Thz argun1ent that by raising the. rate of tax the burden hod been increa•ed to 1uch an extent that the business of the appellon:s had been virtually annihilated had no substance. The operators hnd been permitted to enhance the freights and if the freights could be enhanced, obviously, the burdeo would not fall on them. If the operators were not prepared to charge higher rates as a matter of p·JJicy or for the purpose of business cornpetifrJn that could not impin_ge on the reasonab}l:ness of the restrictions. This disposed of the challen.'!:e under Art. 19(1 ){g) also and even on the assumption that th' pcofits would be diminished or greatly reduced it could not -he held that there was any infrin· gement of Art. 19( 1 )(g). [57 A-DJ
(iii) Under Act XVI of 1952 as amended by Act X of 1958 the G·ove.rnment could grant exemption fron1 payment of tax, by means of a notification, in respect of any motor vehicle. running in a particular area, and such an exemption was .i:i:iven to the operators in the Telengana region
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NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
53
No question of discrimination arose when taxes were being imposed under two different sets of laws in different States or geographical areas The laws in Madras and Aodhra Prade"'h were different and persons having B primary permits from Madras were naturally governed by the laws operat- ing in that State [58 C-D]
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 69, 112 and 113 of 1968.
P. Ram Reddy and P. Parmeshwara Rao, for the respondent o No. 1 (in all the appeals).
The Judgment of the Court was delivered by
Grover, J, These appeals by certificate from a judgment of the Andhra Pradesh High Court which disposed of several petitions under Art. 226 of the. Constitution including the petitions E filed by the appellants involve the question of the constitutionality of the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods Amendment and Validation) Act, 1961, Andhra Pradesh Act XX:Xlv of 1961.
The appellants hold permits either for stage carriage or for public carriers issued under the Motor Vehicles Act, 1939. They F ply these vehicles on different routes in the State as also on some of the inter-State routes. They were subject to tax levied under the Madras Motor Vehicle Taxation Act. 1931.
In 1952 the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 (Act XVI of 1952) was enacted by which G every operator had to pay Rs. 12.50 per seat per quarter or 37 naye paise per seat per mile over and above the tax payable under the Madras Motor Vehicles Taxation Act, 1931. Under that Act the operators were payin[ tax of Rs. ~0 per seat per auarter. The validity of Act 16 of 1952 was challenged before the Madras High Court. In Mathurai Pillai v. The State of Mad•as(') its validity was upheld excent as to the proviso to s. 3 of the Act. After the formation of Andhra Pradesh State the Governor promulgated an Ordinance amending Madras Act 16 of 1952 in the light of the (1) (1954) I.M.L.J. 110.
(1970] 2 S.C.R.
54
SUPREME COURT REPORTS
above judgment. The provisions contained in the Ordinance were subsequently re-enacted as President's Act 11 of 1954. The ope-. rators, therefore, paid taxes imposed under Act 16 of 1952 as amended in the State of Andhra Pradesh. By means of Act 21 of 1959 the legislature of Andhra Pradesh amended Act 16 of 1952. Section 3 of Act 16 of 1952 as amended read as follows:
"In cl. (a) of sub-rule (i) of rule 1 in the schedule to the Principal Act, for the words '37 np. per seat per year per mile the words Rs. 1.48 np. per seat per year per mile and for the words Rs. 12.50 np. per seat per quarter the word Rs. 50/- per seat, per quarter shall be substituted and cl. (b) of the said Sub-rule for the words Rs. 22.50 up. per month the words Rs. 45/- per month shall be substituted."
The validity of the Amending Act 21 of 1959 was challenged by means of writ petitions before the High Court. A Division Bench struck down the impugned provisions as unconstitutional and ultra vires on the ground that since that Act imposed a restriction on the operators' freedom of trade and commerce under Art. 301 of the Constitution the previous sanction of the President was n.ecessary under the proviso to Art. 304 (b) and because that had not been obtained the Act was legally inoperative : Venson Transport v. The State of Andhra Pradesh('). Subsequently Act 34 of 1961 was enacted after the sanction of the President was obtained to the Bill under the proviso to Art. 304(b). It validated two acts, namely, Act 21 of 1959 and Act 22 of 1959 and also amended Act 16 of 1952 and substituted sub-s. (3) of s. 3 of that Act by a new sub-section. It further validated the realisation of the tax paid or payable and the fee paid or payable and other action taken under Act 21 of 1959 and Act 22 of 1959. It empowered the Government to levy additional tax at the rate of Rs. 50/- per seat per quarter from May 8, 1959 to January 16, 1961. Thereafter from January 17, 1961 to November 3, 1961 the rate was fixed at Rs. 12.50 per seat per quarter. After the commencement of the Validating Act 34 of 1961 the rate was to be Rs. 37.50 per seat per quarter. This 'was to be operative till April 1, 1962 when th~. Act would cease to have any effect.
The validity and constitutionality of Validating Act 34 of 1961 were challenged by means of various petitions under Art. 226 of the Constitution. It was sought to be contended before the High Court that the impugned legislation was not regulatory in character: The sole object was to augment the revenues of the State. This brought the statute within the mischief of Art.
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(1) [19611 I. An. W.R. 351.
NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
5 5
A 301 of the Constitution. The High Court was of the view that the question whether the statute was regulatory or compensatory was· relevant in the context of Part XIII of the Constitution only in the event of non-compliance with the proviso to Art. 304(b) of the Constitution. As the previous sanction of the President had been obtained in terms of the proviso such pc•ints could no Il longer be canvassed. The challenge on the ground of Art. 14 before the High Court also failed. An argument was addressed that the impugned Act was repugnant to Art. 19(1)(g) of the Constitution. The reasonableness of the restriction wiihin the meaning of Art. 304(b) also came up for consideration. The High Court, in the light of the facts and figures placed before it, held c that the increase in surcharge of the fares and freights contemplated by the impugned Act did not constitute an impediment to the trade of the transporters and that the restriction in the shape of additional imposts was not unreasonable. It is unnecessary to refer to the other points agitated before and decided by the High Court
Counsel for the appellant has urged th~ following points before us :
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In order to decide these points the principles which have been settled by this Court with regard to Art. 301 and Art. 304(b) may be .noticed. According to the majority view in Automobile Transport (Rrzjasthan Ltd. v. The State nf Rajasthan & Others(') H if a tax is compensatory in character it cannot be said to fall within the mischief of Art. 301. Subba Rao J., (as he then was) (1) [1963]• l S.C.R. 491.
(1970]2 S.C,R.
56
SUPREME COURT REPORTS
who concurred in the majority decision out delivered a separate judgment pre{erred to rest his view on the regulatory nature of such taxing statute as would escape the mischief of Ari. 301. In Khyerbari Tea Co. Ltd. & Anr. v. The State of Assam(') the dif- ference between the vi.ew expressed in the Automobile Transport (Rajasthan) case(') and an earlier decision in Atiabari Tea Co. Ltd. v. The State of Assam & Others(') with regard to the scope and effect of the provisions of Art. 304(b) was noticed . It was ooserved that according to the majority view expressed in Atiabari Tea Co. ca>e(') if the Act is passed under Art. 304(b) and its validity is impeached the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in public interest and in doing so it may rely on the fact that the taxes levied by the impugned Act are Co'llpensatory in cbnacter. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan) (') case con;pensatory taxation would be outside Art. 301 and cannot fall under Art. 304 ( b). since it was not urged that the tax was of a compensatory nature in Khyerbari Tea Co. Ltd.(') case this Court proceeded to examine whether the restrictions imposed by the statute impugned in that case were reasonable and in public interest within the meaning of Art. 304(b). The effect of compliance with the provisions of the proviso to Art. 304(b) by .obtaining the previous sanction of th~ President to the Bill was also considered and it has been laid down that notwithstanding the sanction the question of the restrictions being reasonable and in public interest is open to examination by the court. The Act can be held to be valid only if it is shown that the restrictions imposed by it are reasonable and in public interest.
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It has not been contended on behalf of the State that the impugned Validating Act imposes a tax which is by way of a regulatory or compensatory measure. It has, therefore, to be seen whether the restrictions imposed are reasonable and in public interest within the meaning of Art. 304(b). Before the High Court an attempt was made on behalf of the appellant< to show that by · raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated. According to some of the affidavits filed on behalf of the writ petitioners, profits derived in recent years did not exceed an average of Rs. 2.000/- per stage carriage even without the additional burden which had been imposed and th~· trnnsporters would suffer heavy losses if the tax as increased by the impugned legislation were to be realized. The High Court referred to the computation of the income by the Income tax department of some . (1) [19641 5 S.C.R.975. (2) [196312· S.C.R. 491. (3) [19611 l S.C.R. 809.
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NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.) 57
·'
Coming to the attack on the ground of violation of Art. 14 reference may be made to the background relaCn~ to taxation of <: passengers and goods carried in motor vehicles in the State prior to the formation of Andhra Pradesh. It appears that there was no law in the erstwhile Hyderabad State imposing any tax on passengers and goods. After the merger of Telengana and Andhra areas the laws in operation in the Telengana region continued to remain in force by virtue of the provisions of s. 119 of the States Reorganisation Act, 1956. By Act X of 195~ the State of Andhra ff Pradesh amended Act XVI of 1952 inter alia extending that Act to the Telengana area. This Act (Act X of 1958) also amended the Principal Act by adding s. 19 according to which the LI Sop. Cf/70-5
.__,.,
[1970) 2 S.C.lt.
SUPREME COURT REPORTS
-Government could grant an exemption by means of a notification in respect of any motor vehicle running in a particular area. On November 4, 1961 a notification was issued exempting passengers, luggage and goods carried in stage carriages from payment of tax under the aforesaid Act within the Telengana area. There .can be no manner of doubt that this exemption was given to the operators in the Telengana region for the reason that before the extension of the pi:..:ent Act to this area no tax similar to the one levied under the parent Act was payable in that area and that th:s exemption was granted under a different enactment. It is .apparent that for these reasons the challenge under Art. 14 cannot succeed. The same is the position with regard to the tax payable by the appellants and that which the transporters having permits for inter-State routes have to pay. As has been pointed ·out in the affidavits filed on behalf of the State the laws in the two -States, Madras and Andhra Pradesh are different and persons baving primary permits from Madras are naturally governed by 1he laws operating in that State. No question of discrimination can arise when taxes are being imposed under two different sets ·of laws in different States or geographical areas.
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The appeals, therefore, fail and are dismissed with costs. One hearing fee.
R.K.P.S. •
Appeals dismissed.
3 issues framed by the court
Whether the tax imposed by the Andhra Pradesh validating Act fell within the mischief of Art. 301 despite presidential sanction under Art. 304(b)?
Whether the restrictions imposed by the tax were reasonable and in public interest under Art. 304(b) and infringed Art. 19(1)(g)?
Whether differential application to Telengana and inter-State operators violated Art. 14?
Colour shows how this judgement treated each authority
Mathurai Pillai v. State of MadrasReferred
(1954) I M.L.J. 110
Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan & Ors.Relied on
[1963] 1 S.C.R. 491 · Who else cites this
Khyerbari Tea Co. Ltd. & Anr. v. State of AssamRelied on
[1964] 5 S.C.R. 975 · Who else cites this
Atiabari Tea Co. Ltd. v. State of AssamReferred
[1961] 1 S.C.R. 809 · Who else cites this
Venson Transport v. The State of Andhra PradeshReferred
[1961] 1 An.W.R. 351
6 provisions across 3 enactments
Nazeeria Motor Service
State of Andhra Pradesh
J. C. Shah
V. Ramaswami
A. N. Grover
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
