State of Assam & Ors Vs. Labanya
Probha Debi  INSC 104 (11 April 1967)
11/04/1967 RAO, K. SUBBA (CJ) RAO, K. SUBBA
(CJ) HIDAYATULLAH, M.
CITATION: 1967 AIR 1575 1967 SCR (3) 611
CITATOR INFO :
RF 1975 SC 17 (15)
Constitution of India, 1950, Art. 301, Entry
57 of List II and Entry 35 of List III-Taxation of motor vehicles and
"Principles of taxation" of motor vehicles, difference-Art.
301, scope of.
Under the Assam Motor Vehicles Taxation Act,
1936, no motor vehicle could be used in the Assam Province unless the owner
thereof hadpaid in respect of it a tax at the appropriate rate specified in the
Schedule to the Act. The Schedule was amended from time to time by the
substitution of new Schedules and as a result of such amendments in 1963 and
1966, the tax on stage carriage motor vehicles was gradually raised.
In a writ petition, filed by the respondent,
challenging the validity of the Amending Acts of 1963 and 1966, the High Court
held that the Amending, Acts were made in respect of the matter contained in
Entry 35 of the Concurrent List, namely principles of taxation of motor
vehicles, and, as the provisions of the Amending Acts were inconsistent with
those of the existing law, namely, the 1936 Act, the Amending Acts were ,void,
because, the assent of the President as required by Art. 254 was not received.
In appeal to this Court,
HELD : (i) Taxes on vehicles connote the
liability to pay taxes at &he rates at which the taxes are to be levied,
while, the expression "principles of taxation" denotes rules of
guidance in the matter of taxation. The Amending Acts do not come into conflict
with the existing law in respect of any principles of taxation within the
meaning of Entry 35 of the Concurrent List, but only deal with a subject
matter-, namely, taxes on vehicles within the meaning of Entry 57 of the State
List, which is exclusively within the legislative competence of the State
Legislature; and as such. there is no scope for invoking Art. 254. [615A-C]
(ii) It is only a comparatively small proportion of the general expenditure
incurred on new roads and the maintenance of the ,)Id roads that was realised
through the impugned taxation. Therefore, the Amending Acts are only regulatory
measures imposing compensatory taxes for facilitating trade, commerce and
intercourse. The Acts are, hence, not hit by Art. 301 of the Constitution.
[616C] The Automobile Transport (Raiasthan) Ltd. v. The State of Rajasthan,
 1 S.C.R. 491, followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 38 of 1967.
Appeal from the judgment and order dated
December 1, 1966, of the Assam and Nagaland High Court in Civil Rule No. 145 of
S. V. Gupte, Solicitor-General and Naunit
Lal, for the appellants.
612 Ram Labhaya Obhrai, I. M. Obhrai, S.K.
Mehta and K. L.
Mehta, for the respondent.
The Judgment of the Court was delivered by
Subbarao C.J. This appeal by certificate is directed against the order of the
High Court of Assam declaring that the Assam Motor Vehicles Taxation
(Amendment) Acts of 1963 and 1966 were repugnant to the Assam Motor Vehicles
Taxation Act, 1936 (Assam Act 9 of 1936), hereinafter called the Principal Act,
and, therefore, void as they were made in contravention of the provisions of
Art. 254(2) of the Constitution.
The facts are in a small compass and they are
as follows The Principal Act came into force on March 1, 1937. The assent of
the Governor-General in Council was given under section 35 of the Government of
India Act, 1935. This Act imposes tax on motor vehicles in the Province of
Assam. In 1955 the Principal Act was amended by Assam Act IV of 1956 and it had
received the assent of the President. Subsequently the Principal Act was
amended by Act 15 of 1963, but the Bill was introduced in the Assam State
Assembly with the previous sanction of the President and it came into force on
April 1, 1963. Subsequent to the filing of the petition, out of which the
present appeal has arisen, the Principal Act was again amended in the year 1966
and it came into force on April 1, 1966. The tax on the stage carriage motor
vehicles was gradually raised under each amendment and under the last of the
amendments a sum of Rs. 56/was imposed per seat.
Under the last amendment Act the petitioner
respondent had to pay a sum of Rs. 1680/as tax for the stage carriage she was
The respondent filed a petition under Art.
226 of the Constitution in the High Court for declaring the amending Acts void
and for other reliefs.
The petition was heard by a Division Bench of
the High Court and the learned Judges delivered two separate but concurrent
judgments. They held that the Amending Acts of 1963 and 1966 were void and gave
the petitioner-respondent the reliefs :asked for. Hence the present appeal.
The main question in the appeal is whether
the said Amending Acts increasing the rate of tax are void for constitution
incompetence. The High Court in effect held that the provisions of the said
Amending Acts were inconsistent with those of the existing law, namely, the
Principal Act and, therefore, as they had not received the assent of the
President, were void under Art. 254 of the Constitution.
This conclusion was arrived at on the ground
that the Amending Acts were made in respect of the matter contained in entry 35
of the Concurrent List.
613 To appreciate the contentions it will be
convenient to read at the outset the relevant Articles of the Constitution.
Entry 57 of List II of the Seventh Schedule
to the Constitution :
Taxes on vehicles, whether mechanically
propelled or not, suitable for use on roads, including tramcars subject to the
provisions of entry 35 of List 111.
Entry 35 of List III Mechanically propelled
vehicles including the principles on which taxes on such vehicles are to be levied.
Art. 254 (1) If any provision of law made by
the Legislature of a State is repugnant......... to any provision of an
existing law with respect to one of the matters enumerated in the Concurrent
List, then, subject to the provisions of clause (2)........ the existing law,
shall prevail and the law made by the Legislature of the State shall, to the
extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a
State with respect to one of the matters enumerated in the Concurrent List
contains any provision repugnant to the provisions of an earlier law made by
Parliament or an existing law with respect to that matter, then the law so made
by the Legislature of such State shall, if it has been reserved for the
consideration of the President and has received his assent, prevail in that
Art. 366(10) Existing law means any law, ordinance
or bye-law, rule or regulation passed or made before the commencement of the
Constitution by any Legislature, authority or person having power to make such
a law, ordinance or bye-law, rule or regulation.
The application of the said provisions to the
subject-matter of the present appeal leads to the following result. The
Principal Act was an existing law. If the Amending Acts were made under entry
35 of the Concurrent List and if they were in conflict with any of the
provisions of the existing law, to the extent of the inconsistency the said
amendments would he void. But, on the other hand, if the Amending Acts were
passed under entry 57 of List 11 of the Seventh Schedule, they would fall
outside the scope of Art. 254 of the Constitution, as Art. 254 would apply only
to a conflict between the provisions of an "existing law" and those
or the post-constitution law in respect of matters enumerated in any of the
entries of the Concurrent List.
The learned Solicitor General raised before
us two points, namely, (i) Art. 254 of the Constitution posits the existence of
614 two. parallel laws--One an "existing law" and the other a post
Constitutional law-in respect of any one of the entries in the Concurrent List
and the provisions thereof are in conflict with each other; but it has no
application to a case where the State Legislature, within the scope of its
legislative competency, amends an existing law so as to extinguish a part of
it. (2) The amending Acts were only made under entry 57 of List 11 and,
therefore, there is no scope for invoking the provisions of Art. 254 of the
Learned counsel for the respondent, on the
other hand, contended that there was no distinction between an amending Act and
a new Act in the matter of. application of Art. 254 of the Constitution, as in
either case the provisions of the said Acts would be inconsistent with the
existing law. He further argued that the Amending Acts introduced new
principles of taxation and, therefore, fell squarely within the scope of entry
35 of the Concurrent List.
As we are holding in favour of the appellant
on the second point, it is not necessary to express our view on the first.
The short question, therefore, is whether any
of the provisions of the Amending Acts is repugnant to any of the provisions of
the existing law with respect to any of the matters enumerated in the
Concurrent List. Under the existing law, i.e., Act 9 of 1936, no motor vehicle
could be used in the Assam Province unless the owner thereof had paid in
respect of it a tax at the appropriate rate specified in the Schedule to the
Act and, save as therein specified, such tax should thereafter be payable
annually notwithstanding that the motor vehicle might from time to time cease
to be used (see s. 4). As aforesaid, the Schedule annexed to the Principal. Act
was amended from time to time by different amending Acts and the rate was
increased. Under the 1963 amending Act, apart from other provisions which do
not relate to any principles of taxation, a new Schedule has been substituted.
Neither the amending Act nor the Schedule laid down any principles of taxation
in respect of motor vehicles. So too, the amending Act of 1966 substituted the
Schedule of the Act by another Schedule. A persual of the aforesaid Schedule
only disclose that different rates were fixed; that is to say, the amended
Schedule does not lay down any principles on which taxes on motor vehicles are
to be levied within the meaning of entry 35 of the Concurrent List; it is
solely concerned with taxes on vehicles within the meaning entry 57 of List 11.
The two entries deal With two different matters though allied ones-one deals
with taxes on vehicles and the other with the principles on which such taxes
are to be levied. When two entries in the Constitution, whether in the same
List or different Lists, deal with two subjects, if possible, an attempt 615
shall be made to harmonize them rather than to bring them into conflict. Taxes
on vehicles in their ordinary meaning connote the liability to pay taxes at the
rates at which the taxes are to be levied. On the other hand, the expression
"principles of taxation" denotes rules of guidance in the matter of
taxation. We, therefore, hold that the Amending Acts do not come into conflict
with the existing law in respect of any principles of taxation, 'but only deal
with a subject-matter which is exclusively within the legislative competence,
of the State Legislature. In this view, there is no scope for the application
of Art. 254 of the Constitution.
Even so, learned counsel for the respondent
contended that the amending Acts offend the provisions of Art. 301 of the
Constitution. Article 301 reads "Subject to the other provisions of this
Part, trade, commerce and intercourse throughout the territory of India shall
be free,." The scope of this Article has been authoritatively defined by
this Court in The Automobile Transport (Rajasthan) Ltd.
v. The State of Rajasthan(1). There the
majority held that regulatory Measures or measures imposing compensatory taxes
for the use of trading facilities did not hamper trade, commerce or interCourse
but rather facilitate them, and, therefore, were not hit by the freedom
declared by Art. 301.
There, by virtue of section 4 of the
Rajasthan Motor Vehicles Taxation Act, 1951, read with the Schedules, no one
could use or keep a motor vehicle in Rajasthan without paying an appropriate
tax for it and, if he did so, be was made liable to the penalties imposed under
s. 11 of that Act. This Court by majority held that such taxes were compensatory
and regulatory taxes which did not hinder the freedom of trade. In the present
case the respondent in her petition questioned the validity of the provisions,
of the amending Acts on the following grounds :-(i) The Act abolished the
permit fee previously payable on such motor vehicles. She alleges that as a
result of the rationalisation of tax and the introduction of a single point
levy, the tax fixed irrespective of road condition.
distance travelled, region catered for
imposes crushing burden oil the petitioner and the other stage carriage permit-boulders
plying their vehicles in the short distance route and gives discriminatory
weightage in favour of the State Carriage, Inter-State public carriers and
other vehicles plying in longer distance routes. It will be seen that the
averments are general and vague. On the other hand, the State has filed a
detailed affidavit. The following figures show the expenditure incurred on new
roads and maintenance of old roads and the income from motor vehicles for (1)
 1 S.C.R.491.
616 some years. In 1962-63 the expenditure
was Rs. 671.60 lakhs and the income was Rs. 75.58 lakhs. In 1965-66 the expenditure
was Rs. 1499.77 lakhs and the income was Rs. 137.96 lakhs. From the said
figures it is clear that the State is charging from the users of motor vehicles
something in the neighbourhood of II% and IO % respectively for the said two
years of the cost it has to, incur in maintaining and making roads. From
Annexure D to the said affidavit it appears that in some cases tax under the
1963 Act had been increased by 50% under the 1966 Act and in some cases the tax
under 1963 Act has been increased by 40% under 1966 Act. It is obvious that
comparatively small proportion of the general expenditure is realised through
the impugned taxation. In the circumstances, we must hold that the said Acts
were only regulatory measures imposing _compensatory taxes for facilitating trade,
commerce and intercourse. The Acts are, therefore, not hit by Art. 301 of the
in the result the order of the High Court is
set aside and the appeal is allowed. The petition filed by the respondent in
the High Court is dismissed with costs here and in the court below.