P. Govindan Nair, J.
1. The petitioners in these writ applications, challenge the constitutional validity of the Luxury Tax on Tobacco (Validation) Act, 1964, (Act 9 of 1904). Actually, this is a later development in almost all of these writ applications. At the time they were filed, Act 9 of 1964 referred to above was not in the statute book. The petitions originally contained only the prayer for a direction to refund licence fees collected from the petitioners for granting the various classes of licences as envisaged by the two enactments; the Travancore Tobacco Act (1 of 1087) and the Cochin Tobacco Act (VII of 1084) and the Rules framed thereunder. This collection itself was once challenged in certain writ applications moved before this Court. The point then taken was that by virtue of Section 13(2) of the Finance Acl 1950 (Act 25 of 1950), and the extension of the Central Excises and Salt Act 1944 to the Travancore-Cochin State from 1950, the two enactments, the Travancorc Tobacco Acl (I of 1087) and (he Cochin Tobacco Act (VII of 1084) stood repealed us those enactments represented law which is 'corresponding law' within the meaning of that term in Section 2 of the Finance Act, 1950. A Full Bench of this Court declined to accept this contention and came to the conclusion that the tax imposed by the Travancore Tobacco Act (I of 1087) and the Cochin Tobacco Act (VII of 1084) was in the nature of a luxury tax falling within item 62 of List II of the Seventh Schedule to the Constitution and held that the enactments did not contain 'corresponding law' to that in the Central Excises and Salt Act. The writ petitions consequently were dismissed. In appeal to the Supreme Court the decision of this Court was reversed on the ground that the provisions in the Travancore Tobacco Act (I of 1087) and the Cochin Tobacco Act (VII of 1084) are substantially similar to that contained in the Central Excises and Salt Act, 1944, and therefore was 'corresponding law' and hence stood repealed by virtue of Section 13(2) of the Finance Act, 1950. It was after this decision of the Supreme Court that the present series of petitions were moved.
The prayer mainly, as I stated was for an order for refund of the tax collected from the various licensees in relation to the different licenses taken by them. The petitions were pending for a fairly long time at the repeated requests of the State Government for adjournments, on the ground that the Government was considering the whole question, were granted. Towards the end of last year, when the cases came upon again for hearing the petitioners were confronted with an Ordinance, Ordinance 1 of 1963, which was replaced by Act 9 of 1964. So confronted, the petitions were amended by including prayers in the petitions for quashing the Ordinance as well as Act 9 of 1964.
2. In two of those petitions, pursuant to the decision of the Supreme Court and before the promulgation of Ordinance 1 of 1983, certain amounts were refunded to the petitionerstherein and there is an additional prayer in those petitions that there should be a direction to the State that no attempts should be made to collect again the amounts so refunded.
3. The main attack on Act 9 of 1964 canbe grouped under three heads.
The first, which may be referred to as lack of legislative competence which in turn was presented in two distinct and separate bases, one based on the larger ground that the tax imposed is of a nature which is not within the legislative competence of the State to impose and the other on the basis that the State Legislature (The Kerala Legislation) has no power in any event to promulgate the Act so as to be operative for the period from the 17th day of August, 1950 to the 31st day of November, 1957; the major part of which is a period falling before the formation of the Kerala Legislature on 1-11-1956.
Secondly it was urged that the promulgation of Act 9 of 1964 is a colourable exercise of the Slate Legislature's powers, and thirdly, that the Act is violative of the right of equality guaranteed by Article 14 of the Constitution. There are four other points raised by counsel appearing in these various petilions. I shall refer to them in due course after dealing with the three main points enunciated above.
4. Before dealing with the first of these points, it is necessary to understand clearly what has been decided by the Full Bench of this Court in dealing with the writ applications which come up before it (T. K. Abraham v. State of Travancore Cochin, AIR 1958 Ker129 (FB)); and by the Supreme Court, in appeal, in the decision reported in Abdulkadir v. Stale of Kerala, : AIR1962SC922 . Havingdefined 'Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling', in paragraphs 27 and 28 of the judgment, their Lordships in the decision reported in : AIR1958Ker129 , came to the conclusion that theimposition by the two enactments which were in force in the two areas, Travancore andCochin--the Travancore Tobacco Act (I of 1087) and the Cochin Tobacco Act (VII of 1084)--was not in the nature of excise duly and therefore, was not 'corresponding law' to the Central Excises and Salt Act 1944 and so the Travancore and Cochin Acts were not repealed by Section 13(2) of the Finance Act 1950.
5. The approach of the Supreme Courtseems to have been slightly different. In fact they declined to go into the question as tothe nature of the tax imposed by the Travancore Tobacco Act and the Cochin Tobacco Act. In paragraph 9 of the judgment : AIR1962SC922 , this is what their Lordships observed:
'If the effect of Section 13(2) of the Finance Act, Act 1950 was to repeal the Cochin Act as well as the similar Travancore Act from April 1, 1950, there will be no law in operation which would justify the framing of the new Rules either in August 1950 or in January 1951 and it would then be unnecessary to consider whether a law containing provisions similar to those contained in the notificationswould be within the competence of the Statelegislature under item 62 of list II of the Seventh Schedule. That question would only arise if the Cochin Act or the similar Travancore Act survived the repeal effected by Section 13(2) of the Finance Act'.
And again towards the end of paragraph 12 it is stated;
'It may therefore be accepted that a duly of excise is a tax on goods produced or manufactured in the taxing country. It may also be accepted that generally speaking the tax is on the manufacturer or the producer, though it cannot be denied that laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. We cannot however forget that the Cochin Act or the similar Travancore Act was passed by States in which there were no such constitutional provisions as are to be found in the Government of India Act and its legislative Lists and this aspect will have to be borne in mind when judging the question of correspondence belween the Central Act and the Cochin Act or the similar Travancore Act.'
It is also observed, towards the end of paragraph 14 of the Judgment as follows:
'Therefore when the Central Act was extended to the Part B Stale of Travancore Cochin by Section 11(1) of the Finance Act and the Finance Act specifically provided by Section 13(2) for the repeal of corresponding law, the result was that the Cochin Act as well as the similar Travancore Act stood repealed. There would be no power in the State Government thereafter to frame new Rules either in August 1950 or in January 1951 for there would be no law to support the new Rules and without such law the new Rules could not impose a tax as that would clearly offend Article 265 of the Constitution. Further as soon as the Cochin Act as well as the similar Travancore Act stood repealed on April 1, 1950, by virtue of Section 13(2) of the Finance Act there could be no question of their being sustained under item 62 of List II of the Seventh Schedule for that would only arise if these were not repealed as corresponding law by Section 13(2)'.
6. It is therefore clear that the nature of the imposition and levy by the rules of August 1950 (so far as the Cochin area is concerned) and by the rules dated 25th January 1951 (So far as Travancore area is concerned) has not been considered or determined by the Supreme Court. I may add that the difference between the rules that were in existence on 1-4-1960; the dale on which the Finance Act was extended to the State of Travancore-Cochin by Section 11(1) thereof, and the rules framed in August 1950 and January 1951, was also referred to by the Supreme Court. Their Lordships stated that the rules that were in force on 1-4-1950--those applicable to the Travancore are as well as those in force in the Cochin area--controlled the production and manufacture of tobacco from the earliest stage, viz., its cultivation or growth and that such control continued till the commodity was available for general consumption through a retail licensee. This control which extended duringthe period from growth to Sale was not envisaged by the rules of August 1950 and January, 1951.
7. With these premises, the question as to whether Act 9 of 1964 is within the competence of the Legislature or not has to be considered. The Act in its long title states that it is 'an Act to provide for the levy of a luxury tax on tobacco for the period beginning with the 17th day of August 1950 and ending on the 31st day of December, 1957, and the validation of the levy and collection of fees for licences for the vend and stocking of tobacco for the aforesaid period'. The preamble is similarly worded and states:
'Whereas it is expedient to provide for the levy of a luxury lax on tobacco for the period beginning with the 17th day of August, 1950 and ending on the 31st day of December, 1957, and the validation of the levy and collection of fees for licences for the vend and stocking of tobacco for the aforesaid period.'
Then follows the 'Short title and extent' in Section 1, and 'Definitions' in Section 2. Section 3 relates to 'charge of luxury tax' reading as under:
'Charge of luxury tax. For the period beginning with the 17th day of August, 1950 and ending on the 31st day of December, 1957, every person vending or stocking tobacco within any area to which this Act extends shall be liable and shall be deemed always to have been liable to pay a luxury tax on such tobacco in the form of a fee for licence for the vend and stocking of the tobacco, at such rates as may be prescribed, not exceeding the rates specified in the schedule.'
Sub-sections (1) and (2) of Section 4 empower the Government to make rules and Sub-section (3) of Section 4 which is pertinent reads as follows:
'The rules and notifications specified below purported to have been issued under the Tobacco Act of 1087 (Travancore Act I of 1087) or the Cochin Tobacco Act VII of 108-1, as the case may be, in so far as they relate or purport to relate to the levy and collection of fees for licences for the vend and stocking of tobacco, shall be deemed to be rules issued under this section and shall be deemed to have been in force at all material times....' Sections 5 and 6 are also important, the first of these dealing with the 'validation' and the second with the 'recovery of licence fees refunded'. The relevant part of Section 5 is as follows: 'Notwithstanding any judgment, decree or order of any court, all fees for licences for the vendor stocking of tobacco levied or collected or purported to have been levied or collected under any of the rules or notifications specified in Sub-section (3) of Section 4 for the period beginning with the 17th day of August, 1950 and ending on the 31st day of December, 1957, shall be deemed to have been validly levied or collected in accordance with law as if this Act were in force on and, from the 17th day of August, 1950 and the fees for licences were a luxury tax on tobacco levied under the provisions of this Act...'
And Section 6 reads:
'Where any amount paid or purported to have been paid as a fee for licence under any of the rules or notifications specified in subsection (3) of Section 4 has been refunded after the 24th day of January, 1962, and such amount would not have been liable to be refunded if this Act had been in force on the date of the refund, the person to whom the refund was made shall pay the amount so refunded to the credit of the Government in any Government treasury on or before the 16th day of April, 1964, and, where such amount is not so paid, the amount may be recovered from him as an arrear of land revenue under the Revenu Recovery Act for the time being in force.'
The Act concludes with the repeal of Ordinance I of 1963.
8. It is clear from the provisions of the statute referred to that the levy of fees for the issue of licences for vending and stocking tobacco during the period from the 17th August 1950 till the 31st December 1957 is validated as if the statute, Act 9 of 1964, was in force during that period and as if that Act had imposed a luxury tax. Whatever be the actual nature of the levy, it is clear from the provisions referred to above that the legislature has chosen to call that a 'luxury tax'. This notwithstanding, the rule is well settled that the nature of the tax must be determined by finding out what it really purports to impose. Counsel on behalf of petitioners in these wriS petitions are uniform in their assertion that the tax imposed is an excise duty falling within item 84 of List I of the Seventh Schedule to the Constilution. They have of course gone further and stated that this is a case of colourable exercise of legislative power in that the Legislature has deliberately done something indirectly which it could not have done directly. They urged that the long title, the preamble, the Charging section and the validating provisions referred to and the description of the charge of Luxury Tax, are only a camouflage for hiding the true nature of the levy. A determination of the nature of the levy is, therefore, indispensable and it seems to me that I must therefore understand first what is meant by an 'excise duty', because it seems to me more difficult to define with any greater degree of precision the characteristics of a 'luxury tax'. There have been decisions of the Federal Court, Privy Council and the Supreme Court, which have classified the nature of the excise duty. I may refer to some of these decisions. In the matter of Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, AIR 1939 FC 1, it was held that the primary meaning of 'excise duty' is that it is a tax on articles produced or manufactured in the taxing territory. It was also observed in that case that it cannot be denied that laws are to be found which impose a duty of excise, at stages subsequent to the manufacture or production.
In Province of Madras v. Boddu Paidanna & Sons, AIR 1942 FC 33, it is laid down that duties of excise are duties levied on the manufacturer or producer in respect of the dity manufactured or produced.
The Privy Council in the decision reported in Governor-General in Council v. Province of Madras, , approved the view of the Federal Court, and the Supreme Court considering these decisions stated in : AIR1962SC922 :
'It may therefore be accepted that a duty of excise is a tax on goods produced or manufactured in the taxing country. It may also be accepted that generally speaking the tax is on the manufacturer or the producer, though it cannot be denied that laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production.'
9. The only gloss on these fairly clear pronouncements, ranging over a period of a quarter of a century, is to he found in the decision of the Supreme Court, In re Sea Customs Act, (1878) S. 20 (2), AIR 1963 SC 1760. There the contention was raised that by virtue of Article 289 of the Constitution, the Union has no power to impose excise duty on any goods manufactured or produced inside a Stale as such goods were the property of the State in which it was produced and therefore exempt from taxation by Article 289(1) of the Constitution. In the judgment in that case, their Lordships referred to the nature of the excise duty and after adverting to the decisions quoted above, came to the conclusion that the excise duty is not a duty on an article, but is a duty in respect of and in relation to an article and therefore, upheld the levy by the Central Government.
10. The question is whether the levy in this case is similar to that imposed by the Central Government and which was the subject matter of the decision referred to. Item 62 in List II of the seventh schedule to the Constitution makes it clear that a power has been conferred on the State Legislature to impose 'Taxes on Luxuries'. There must therefore he some compelling reason to hold that when a tax has been imposed on tobacco, it is not a 'luxury tax' but an 'excise duty'. Tobacco, it is admitted, is an article of luxury. It seems to me that 'luxury tax' is a tax on an article. In order that it might be a luxury tax, this article must be an article of luxury. This is the way in which this Court approached the question in its decision reported in AIR 1958 Kerala 129. Their Lordships said:
'In the absence of a specific statutory definition, what is a luxury will always he : matter of opinion whether we define it in terms of the price paid or the nature of the article itself. There can he no doubt, however, that tobacco has invariably been considered an arlicle of luxury throughout the world and that the Indian Taxation Enquiry Commission (1924-25) was right when they said that it is 'a typical instance of a conventional luxury whose use goes down to the poorest classes' in this country.
The imposition of taxes on articles which are deemed to be luxuries may spring from either the desire to restrict the expenditure ofmoney in certain directions or to tax the rich or that part of the expenditure of all classes that is regarded as a superfluity or as socially undesirable.'
11. Even the Travancore Legislature intended an imposition in the nature of a luxury tax, is indicated from the following passage in the Travancore Excise Manual, Volume I, at page 191:
'Tobacco has long been an arlicle of consumption as luxury amongst all classes and creeds and amongst men and women of all ages in this country. It has therefore been a source of revenue to Government without pressing heavily upon the people.'
12. A tax can therefore be imposed by the State Legislature, on an article of luxury. This is so even though 'in respect of and in relation to' the same article an excise duty may be imposed by the central legislature by virtue of item 84 in List I of the VIIth Schedule to the Constitution. The two entries, item 62 in List II and item 84 in List I. have to be given their full ambit and force. The one certainly cannot over-ride the other if they can co-exist. I need only refer to the decision of the Privy Council in support of this. The case is and the following passage is illustrative:
'The term 'duly of excise' is a somewhat flexible one: it may, no doubt, cover a tax on first and perhaps on other sales: it may in a proper context have an even wider meaning. An exhaustive discussion of this subject, from which their Lordships have obtained valuable assistance, is to be found in the Judgment of the Federal Court in . Consistently with this decision, their Lordship are of opinion that a duty of excise is primarily a duty levied upon a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax upon goods not upon sales or the proceeds of sale of goods. Here again their Lordships find themselves in complete accord with the reasoning and conclusions of the Federal Court in the Boddu Paidanna case. AIR 1942 FC 33. The two taxes, the one levied upon a manufacturer in respect of his goods, the other upon a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of exercise, finds it convenient to impose that duty at the moment when the exciseable article leaves the factory or workshop for the first time upon the occasion of its sale. But that method of collecting the tax is an accident of administration: It is not of the essence of the duty of excise which is attracted by the manufacture itself. That this is so is clearly exemplified in those excepted cases in which the Provincial, not the Federal. Legislature has power to impose a duty of excise. In such cases there appears to be no reason why the Provincial Legislature should not impose a duty of excise in respect of the commodity manufactured and then a tax on first or other sales of the samecommodity. Whether or not such a course is followed appears to be merely a matter of administrative convenience. So by parity of reasoning may the Federal Legislature impose a duty of excise upon the manufacture of exciseable goods and the Provincial Legislature impose a tax upon the sale of the same goods when manufactured.'
13. The emphasis, as it appears from Act 9 of 1964 read with the rules applicable, does not seem to be on the manufacture or production but on an article of luxury. The tax imposed by the statute cannot therefore be found to be an Excise Duty.
14. The other wing of the argument relates to the competence of the legislature to impose lax retrospectively and for a period which falls before the date of the formation of the Kerala State 1-11-1956. The powers of a legislature have to be gleaned from the provisions in the Constitution. Its powers, affirmatively, must be stated in the Constitution, and the restrictions on its powers, negatively, must also be dealt with therein. It is not possible to stray to any other provision or any other law for determining the powers of the Legislature supreme within ifs spheres, and the extent of its powers will have to be covered by the Constitution. Reading item 62 in List II of the Seventh Schedule to the Constitution and the other provisions in the Constitution, there are no restrictions discernible in relation to the period for which Legislation can be had. I may refer in this connection to a decision of the Privy Council, in The Queen v. Burah, 5 Ind App 178 (PC) and the following passage from the judgment of Lord Selborne:
'The Indian Legislature has powers expressly limited by the Act of the Imperial Parliament which created it, and it can, of course, do nothing beyond the limits which circumscribe these powers. But, when acting within those limits, it is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation, as large, and of the same nature, as those of Parliament itself. The established Courts of Justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question; and the only way in which they can properly do so, is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation, within the general scope of the affirmative words which give the power, and if it violates no express condition or restriction by which that power is limited (in which category would, of course, be included any Act of the Imperial Parliament at variance with it), it is not for any court of Justice to inquire further, or to enlarge constructively those conditions and restrictions.'
A portion of this passage has been quoted with approval by the Supreme Court in the decision in Union of India v. Madan Gopal Kabra, : 25ITR58(SC) Chief Justice Patanjali Sastri had to decidewhether the parliament has power to pass a law taxing income which had accrued prior to the commencement of the Constitution.
'Even so, it was contended, the Finance Act, 1950, in so far as it purports to authorise such levy is ultra vires and void as Parliament was not competent under the Constitution to make such a law. The argument was put in two ways. In the first place, it was said broadly that as the Constitution could not operate retrospectively as held by this Court in Kesavan Madhava Menon's case, the power of legislation conferred by the Constitution upon Parliament could not extend so as to charge retrospectively the income accruing prior lo the commencement of the Constitution. This is a fallacy. While it is true that the Constitution has no retrospective operation, except where a different intention clearly appears, it is not correct to say that in bringing into existence new Legislatures and conferring on them certain powers of legislation, the Constitution operated retrospectively. The legislative powers conferred upon Parliament under Article 245 and Article 246 read with List I of the Seventh Schedule could obviously be exercised only after the Constitution came into force and no retrospective operation of the Constitution is involved in the conferment of those powers. But it is a different thing to say that Parliament in exercising the powers thus acquired is precluded from making a retroactive law. The question must depend upon the scope of the powers conferred, and that must he determined with reference to the 'terms of the instrument by which, affirmatively the legislative powers were created and by which, negatively, they were restricted' 5 Ind App 178 (PC). Article 245 of the Constitution enacts that subject to its provisions Parliament may make laws for the whole or any part of the territory of India and Article 246 proceeds to distribute legislative powers as between Parliament and the Stale Legislatures in the country. Thus, these articles read with entry No. 82 of List I of the Seventh Schedule empower Parliament to make laws with respect to taxes on income for the whole of the territory of India, and no limitation or restriction is imposed in regard to retroactive legislation. It is, therefore, competent for Parliament to make a law imposing a tax on the income of any year prior to the commencement of the Constitution.'
15. There are a number of other decisions of the Supreme Court and the Federal Court which have taken the view that the power to enact legislation retrospectively is vested in the State Legislatures and the Parliament. Reference may be made to the decisions in Raghubir Singh v. State of Ajmer, : AIR1959SC475 . in Ramkrishna v. State of Bihar, : 50ITR171(SC) and in Subramanyan Chettiar v. Muttuswami Goudan, .
16. Reliance was placed on a Full Bench decision of this Court in Ananthanarayana Iyer v. Agricultural Income Tax & Sales Tax Officer, : AIR1959Ker182 . There are no doubt certain passages in that judgment which may indicatethat there is no power in the State Legislature to enact a law for a period with reference to a territory, which during that period was not part of the State. But the real decision in that case as well as in the case reported in Biswambar Singh v. Collector of Agricultural Income-tax, : 28ITR386(Orissa) and the one in Madangopal Kahra v. Union of India, turned on the wording of the Section of the statute which related to the imposition of agricultural income-tax. The relevant sections provide, that the agricultural income must be income derived from lands situated inside the State. This necessarily meant that at the time of the accrual of the income, the land should have been inside the State. The decisions in the above cases have to be rested purely on the interpretation of the Section and certainly cannot be authorities for holding that the State legislature has no power to legislate with retrospective effect. The first contention raised on behalf of the petitioners must therefore fail.
17. Regarding the question of colourable exercise of legislative powers, the point is well settled by a number of decisions of the Supreme Court. I need refer only to two of them. The first of these is in Gajapati Narayan Deo v. State of Orissa, : 1SCR1 . B. K. Mukherjea J., as he then was, very clearly, if I may say so with the utmost respect, laid down the principles relating to the doctrine of colourable exercise of powers. This is what is stated at page 379 of the report.
'It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of 'bona fides' or 'mala fides' on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power....
If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject-matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases, that the expression 'colourable legislation' has been applied in certain judicial pronouncements. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. As was saidby Duff, J. in Attorney-General for Ontario v. Reciprocal Insurers, 1924 AC 328:
'Where the law making authority is of a limited or qualified character it may be necessary to examine with some strictness the substance of the legislation for the purpose of determining what is that the legislature is really doing.' In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject-matter in substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation. The legislature cannot violate the constitutional prohibitions by employing an indirect method.'
This decision was quoted with approval in Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, : AIR1959SC308 :
'But Mukherjea J., as he then was, clarified the legal position in : 1SCR1 . It was contended in that case that the Orissa Estates Abolition Act, 1952, was a colourable legislation and as such void. Adverting to that argument, Mukherjea J., as he then was, says at p. 379 of AIR thus:
The passage which I quoted already from the decision in : 1SCR1 was extracted thereafter and the judgment continued : 'We have quoted the observations in ex-tenso as they neatly summarise the law on the subject. The legal position may be briefly stated thus: The legislature can only make laws within its legislative competence. Its legislative field may be circumscribed by specific legislative entries or limited by Fundamental rights created by the Constitution. The Legislature cannot overstep the field of its competency, directly or indirectly. The Court will scrutinize the law to ascertain whether the Legislature by device purports to make a law which, though in form appears to be within its sphere, in effect and substance, reaches beyond it. If, in fact, it has power to make the law, its motives in making the law are irrelevant.'
18. The motive in enacting a law is therefore irrelevant for the purpose of determining the question as to whether the exercise of power, is colourable or not. The point is whether there has been any transgression of the constitutional limits in enacting the law in question. This would depend, so far as this case is concerned, on the further question as to whether the tax imposed by Act 9 of 1964 will fall within item 62 in List II of the Seventh Schedule to the Constitution. I have already held that the lax imposed will fall within that item. This being so, it is impossible to contend that the exercise of power by the legislature is colourable.
19. The only other question remaining on this aspect of legislative competence is as to whether the statute, Act 9 of 1964, has infringed the provisions of Article 14 of the Constitution. I may at the outset refer to two passagesfrom Willis on Constitutional Law (1936 Edn.). At page 587, it is said:
'The Supreme Court permits a wider discretion in classification under the power of taxation, if possible, than it does under the police power. One reason for this undoubtedly is the urgent need for revenue by the various governmental agencies. A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods, and even rates for taxation if it does so reasonably. The Constitution does not say how cases shall be decided. All it says is that the states shall not deny to any persons within their jurisdiction the equal protection of the laws. It does not say when persons are within the jurisdiction of a state nor what arc equal laws. As a consequence the Supreme Court decides cases as it thinks they ought to be decided with no other mandate than one to decide.'
20. This passage has been quoted with approval in two decisions of the Supreme Court in West Ramnad Electric Distribution Co. Ltd. v. State of Madras, : 2SCR747 and in Khyerbari Tea Co. Ltd. v. State of Assam, : 5SCR975 .
21. There is one more passage which is pertinent and that is at page 589 of Willis on Constitutional Law:
'The equality clause does not forbid geographical classification. A state, if it desires, may levy taxes over the entire state and thus make the stale the unit; hut if the state desires, it may establish taxing districts or other sub divisions, like a city or territory within a city. In such cases all that is required is the same basis of classification within the district or subdivision.'
22. This passage has been referred to by the Full Bench of this Court in : AIR1959Ker182 , wherein the contention that there was discrimination violating Article 14 of the Constitution was put forward and negatived.
23. The contention that Article 14 has been violated in these cases is rested on two grounds. The law, by a provision in Act 9 of 1964 has been made applicable only to that part of the Kerala Stale which once formed Travancore and Cochin and that it was made applicable even to that area only for the period from 17-8-1950 to 31st December, 1957. This seeming discrimination, it is contended by the learned Advocate General who appeared for the State is justified because it forms 'a geographical classification' based on historical reasons. That the laws that were in existence in the areas which went to form the Kerala State were distinct and had different implications is not denied. Neither can it be controverted that in the Travancorc and Cochin areas, there were two enactments which allowed impost and collection of the licence fees in regard to the stocking and vending of Tobacco. Though these statutes really stood repealed on April, 1, 1950, the collection was going on as if they were still in existence till the Supreme Court clarified the position in the decision reported in : AIR1962SC922 . That was in January, 1962. Due to these historical reasons, if the legislature decided to make a geographical classification and limited the impost for the duration when collections were originally and actually made it is certainly not for this Court to say either that this classification is unwarranted or that it infringes Article 14 of the Constitution. I reject this contention as well.
24. One of the counsel appearing for one of the petitioners ventured to submit that permitting the impost under Act 9 of 1964 is to permit a double taxation which according to him is not warranted by the provisions of the Constitution. The passage that I have already referred to from gives a complete answer to this contention. However, I may refer to two more decisions of the Supreme Court which specifically stated that there is no infringement of any constitutional provisions in double taxation resulting from the State and Central Legislatures imposing different taxes. In Ram Krishna Ramnath firm, Kamptee v. Secy., Municipal Committee, Kamptee, : 1978(2)ELT284(SC) , a tax of excise duty has therefore been upheld and in Mathra Parshad & Sons v. State of Punjab, : AIR1962SC745 , a tax of excise as well as a tax on sale were similarly said to be valid.
25. The 5th point urged was that in any view of the matter, the validating provision, contained in Section 5 of the Act which I extracted earlier is invalid. As I understand the argument, the contention seems to be, that the effect of Section 5 is to validate a non-existing thing --non-existing because the earlier statute stood repealed by the Finance Act 1950. But what the validating Act has really done is to introduce a legal fiction that it should be deemed that the luxury tax imposed by the present statute, Act 9 of 1964, was in force during the period from the 17th August, 1950 to the 3lst December, 1957. Therefore, I have to imagine that there was in existence a statute during the period containing the provisions stated in Act 9 of 1964. This must be read with the rules which have been made applicable by Section 4(3) which also must be deemed to have been in force for that period. What Section 5 says is that the licence fees once collected shall be deemed to be licence fees collected in accordance with the provisions of the pre sent statute and rules. If these fictions are imported the amount collected would be under the statute, Act 9 of 1964. So read, I do not find any infirmity in this section. If authority is wanted for the proposition, reference may be made to the decision reported in : 2SCR747 . The facts of the case are briefly these. The Legislature of the State of Madras promulgated an Act, Act XLIII of 1949 for the acquisition of Madras Electricity Supply undertakings. It was held by the Supreme Court in Rajahmundry Electric Supply Corporation Ltd. v. State of Andhra, : 1SCR779 , that the Madras Legislature had no competency to enact that law. The Madras State Legislature again passed a similar law. The Madras Electricity Supply Undertakings (Acquisition) Act, 1954 and by Section 24 of that enactment sought to validate the steps taken under the earlier, enactment. This validation was questioned though counsel appearing in that case did not go to the extent of questioning the power of the legislature to enact a law retrospectively--this point in fact was conceded--it was only suggested that a law which infringes a fundamental right as the right to property, cannot be enacted retrospectively. This contention was rejected by the Supreme Court.
26. The petitioners must fail as regards this contention as well. And the only remaining question relates to the validity of Section 6 which provides for the recovery of any amount that might have been refunded to the licencees after the 24th day of January, 1962. The powers to provide for such things are only subsidiary and incidental to the exercise of the powers conferred by item 62 of List II of the Seventh Schedule to the Constitution. It was so held by the Supreme Court in Burmah Construction Co. v. State of Orissa, : AIR1962SC1320 .
27. In the result, these writ applications have to be dismissed, and I dismiss all of them; but without costs.