Govindan Nair, J.
1. These writ applications were heard along with a batch of other writ applications where common questions have been raised. It is agreed that the decision in these cases will govern the other petitions as well.
2. The petitioners in these writ applications are all 'operators' within the meaning of that term as defined in Section 2 (b) of the Kerala Motor Vehicles (Taxation of Passengers and Goods) Act, 1963, (hereinafter called 'the Act'). They impugn the validity of the Act. The grounds on which the Act is challenged may be grouped under five heads; (a) the enactment though it purports to be under Item 56 of List II of the Seventh Schedule to the Constitution, really does not fall within the ambit of that entry; in fact it has trespassed on legislative powers vested with the Union Parliament and is a colourable piece of legislation and is incompetent; (b) the Act violates Part XIII of the Constitution, particularly Article 301 thereof, and does not satisfy the requirements of Article 304 (b); (c) the Act infringes Article 14 of the Constitution; (d) that it is against the provisions in Article 19(1)(g); and finally (e) that even if the Act is construed to have imposed the burden of the tax on the 'goods and passengers' it is still ineffective because of lack of provisions in the statute or rules made thereunder for collection of the tax from the passenger and/or the owner of the goods.
3. We shall deal with these arguments serially. But before doing so, it is necessary to refer to the salient provisions in the Act to understand its scope and ambit. We may refer first to the preamble of the Act which runs thus:--
'Whereas it is expedient to provide for the levy of a tax on passengers and goods carried in stage carriages and public carrier vehicles in the State of Kerala;' This is followed by the important charging Section, Section 3, which we shall extract in full:
'Levy of tax on passengers and goods. --On and from the date of commencement of this Act, there shall be levied and paid to the Government, a tax on all passengers, luggage and goods carried by stage carriages, and on all goods transported by public carrier vehicles, at the rate of 10 naye paise in the rupee on the fares and freights, payable to the operators of such stage carriages and at the rate of 5 naye paise in the rupee on the freights payable to the operators of such public carrier vehicles;
Provided that in the case of all goods transported by public carrier vehicles for export out of the territory of India, no tax under this section shall be payable;
Provided further that no tax shall be levied on any passenger, luggage or goods carried in a stage carriage, if the total distance permitted to be covered by such stage carriage in a day, does not exceed eighty kilometres.
Explanation I. For the purpose of this proviso, 'export' shall not include movements of goods from one port in the territory of India to another port in the said territory.
Explanation 2. For the removal of doubts it is hereby declared that -
(i) in respect of passengers, luggage or goods booked through over the railways and any road transport service, the tax payable under this Act shall be calculated only on the fares and freights payable on such passengers, luggage or goods for the distance on the road covered by the taxable vehicle;
(ii) no tax shall be payable under this Act on goods carried by any vehicle owned by any department of the Central Government or by the Railways.'
Section 4 provides for the composition of tax on an application by the operator which term means 'any person whosename is entered in the permit as the holder thereof'. Section 5 enjoins that in respect of every taxable vehicle, meaning thereby 'a stage carriage, or a public carrier vehicle, which is referred to In Section 3', the operator shall deliver or cause to be delivered a return in the prescribed form and Section 6 enjoins that the operator shall pay the tax payable during any month to a Government treasury and the receipt evidencing such payment forwarded to the prescribed officer before the 15th day of the month immediately succeeding. There is a further provision made hi Section 7 for action being taken where no returns have been filed or when the returns filed by the operator appear to be incorrect or incomplete. Section 8 provides for steps to be taken against the operator in case of escapement of tax. Penalty can be imposed on the defaulter under Section 9 and Section 10 contains a provision for the recovery of tax due under Sections 7, 8 and 9.
It is clear from Sections 11 and 12 that a transferee of a motor vehicle will be liable for the tax that should have been paid by the transferor and that no taxable vehicle shall be used on any public road in case any tax or penalty payable in respect thereof remains unpaid or where returns required by Section 5 have not been filed. Section 15 provides for offences and penalties and Section 17 for composition of offences. There is provision made in Section 18 for reduction of tax in certain cases and Section 19 contains the power of Government to notify exemptions. The only other provision that we need notice is that contained in Section 20 which empowers the Government to make rules. These powers as normally, are expressed in Section 20 (1) in very wide terms, namely, to make rules to carry out the purpose of the Act and in enumerating the specified powers without prejudice to the generality of the provision in Section 20 (1), it is inter alia provided in Section 20 (2) (g) that rules may be made for any other matter for which there is no provision or no sufficient provision in the Act and for which provision is, in the opinion of the Government, necessary for giving effect to the purposes of the Act.
4. On the basis of these provisions counsel appearing in these cases urged that notwithstanding the preamble to the statute which speaks in fairly clear and unequivocal terms that the object is to levy a tax on passengers and goods carried in stage carriages and public carrier vehicles in the State and notwithstanding the repetition of the same words in the key section, as we may call it. Section 3, which is the charging Section, and further provision being made in Section 19 empowering the Government bynotification to exempt or reduce the tax or the rate on any specified class of passengers, luggage or goods, the statute has in effect, if not actually, imposed the tax on the operator, namely, the person whose name is entered in the permit as the holder thereof.
This submission is made on the basis of the provision contained in Sections 5 to 10 and the further provisions contained in Sections 11 and 12 as well as those in what we may call the penal provisions of the statute. The argument is that though the legislature has chosen to use the language of the Constitution contained in Item 56, of List II of the Seventh Schedule to the Constitution which speaks of 'taxes on goods ;.nd passengers carried by road or on inland waterways' they have imposed the tax not on the passengers or on the goods, in the sense on the owners of the goods, but on the persons who carry these passengers or goods, namely, the operators. It is on this basis that it is urged that the statute is a colourable piece of legislation.
Our attention has been invited to Item 89, in List I, of the Seventh Schedule to the Constitution dealing with powers of Parliament and it was emphasised that that entry permits legislation imposing taxes on railway fares and freights but there is no corresponding entry in the State List empowering the State Legislature to impose any such tax. It is also urged that whenever provision is to be made by legislation regarding carriage of passengers and goods the framers of the Constitution have stipulated for it, though not expressly for imposing tax, in Item 30, of List I of the Seventh Schedule to the Constitution, Item 30 states 'carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels'.
Emphasis also was laid on Entry 57 of List II of the Seventh Schedule to the Constitution providing for 'taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List III'. And it is said that full and ample powers have been granted by this entry on the State Legislature to impose taxes on vehicles and therefore necessarily on the owners of those vehicles. It is said that there are very few entries in all the three lists taken together which have indicated specified persons as taxable. Reference was made in this connection to Items 30 and 31 in the State List, List II of the Seventh Schedule to the Constitution, which grant powers of legislation in respect of moneylenders and inn-keepers respectively. Entry 89 in List I of the Seventh Schedule, was also referred to where provision is made for terminal taxes on goods or passengers.
Apart from these entries, pointing to Certain specified classes of persons, the only other entry pointing in the same direction is the one contained in Item 56 of List II of the Seventh Schedule which again speaks of taxes on goods and passengers carried in a particular manner.
5. These according to counsel for the petitioners indicate a pattern and it is said that the entries where reference is made to persons or class of persons the power given is to impose taxes on those persons. And it is urged with emphasis that it is impossible to read taxes on passengers at any rate, as taxes in anybody else than passengers. These entries, therefore, it is urged, must be understood not in any limited sense but in its full amplitude as all legislative entries in a Constitution should be, but must be given only its reasonable connotation as has been ruled by the Supreme Court in Diamond Sugar Mills Ltd. v. State of Uttar Pradesh, AIR 1961 SC 652. Their Lordships observed in that judgment:--
'In considering the meaning of the words in the entries in the Seventh Schedule, the Courts have, on the one hand to bear in mind the salutary rule that the words conferring the right of legislation should be interpreted liberally end the powers conferred should be given the widest amplitude; on the other hand they have to guard themselves against extending the meaning of the words beyond their reasonable connotation, in an anxiety to preserve the power of the legislature.'
6. We are warned that we should not show any such anxiety and that reasonably and fairly read, the entry in Question, Item 56 of List II of the Seventh Schedule to the Constitution, permits the impost of a tax only on the passenger and the owner of the goods and not on the operator.
7. In regard to this aspect of the case It is not the contention of the State Government as stated in the counter affidavits that have been filed in O. P. Nos. 1476 of 1966 and 535 of 1967 that the enactment has imposed a tax on the operator. On the other hand, they say specifically in paragraph 10 of the counter affidavit in O. P. No. 535 of 1967:--
'The tax under the impugned Act Is on the passenger and the owners of goods transported. It is levied at a proportion to the fares and freights. The operator Is only made the collecting agent for administrative convenience. That will not in any way alter the nature of the tax. It is not a tax on the income of the operator as alleged by the petitioner.'
8. It is therefore really unnecessary tor us to go into the larger and perhapsmore vexed question as to the real ambit and scope of Item 56 in List II of the Seventh Schedule to the Constitution. When we say so. we are not ignoring the contention that has been raised in his argument by counsel appearing for the State that even if we come to the conclusion that the statute is a taxing enactment imposing a tax on the operator as defined in the Act, it is still within the legislative competence of the State. We shall not ignore this and we shall advert to the contention and the authorities that have been relied on in support of the contention. But as we have indicated, we do not think it is necessary to pronounce anv opinion in this case regarding that aspect.
9. The Act in question came in the wake of a number of similar enactments passed in different parts of the Indian Union which had been challenged before courts wherein the scope and effect of those statutes were interpreted. Invariably it has been held that those statutes imposed the tax only on the passengers and goods and not on the operator or on his income. The Act in Question was passed after the Judicial pronouncements interpreting the scope and ambit of similar legislation were rendered. The opinion expressed uniformly was that the statutes imposed the tax only on the passengers and goods and not on the operator or his income. In these circumstances it is difficult to assume that the State Legislature in passing the enactment on similar, if not identical terms, was passing a statute to serve a purpose different from those to be served by those statutes. The purpose was construed to be to impose the tax burden on the passengers and the goods; in other words the incidence of the tax to fall on the passengers and the1 owner of the goods. We wish to clarify that what we mean and understand by the incidence of tax falling on a person is that the tax must fall on a person from whom there is no further possibility of shifting the burden to anybody else.
10. It has been clearly stated construing similar statutes that the object was to tax the passengers and goods in the sense which we have indicated; the earliest of such pronouncements was made more than a decade before the State Legislature brought into operation, on 1-7-1963, the Act. We may refer to the decision of the Patna High Court in Atma Ram Budhia v. State of Bihar, AIR 1952 Pat 359 (SB) which dealt with the Bihar Finance Act, (17 of 1950), particularly Section 12 thereof, which imposed an identical tax on passengers and goods. It is useful to extract the section because we are unable to see any difference in substance between the wording of thatsection and the wording of the charging section in the Act.
'From and after the commencement ofthis Act, there shall be charged, levied and paid to the State Government, a tax on all passengers carried by motor cabs, stage carriages and contract carriages and on all goods transported by public carriers at the rate of two annas in the rupee on all fares and freights payable to owners of such motor cabs, stage carriages, contract carriages or public carriers'.
Apart from this charging section, there was no further or additional provision anywhere in the statute concerned which threw any light on the scope and effect of the statute. No doubt Rules 9, 10 and 13, framed under that statute gave further indications or perhaps threw light on the obscure provisions contained in the statute and these rules have also been relied on by the Court in coming to the conclusion that the tax imposed by that statute was a tax on the passenger in the sense that the incidence of the tax fall on him, and there was no tax imposed on the operator or on his income.
11. Hardly two years later, a similar statute passed by the Madras Government was challenged before the High Court and the decision of the Madras High Court is in P. Mathurai Pillai v. State of Madras, AIR 1954 Mad 569. The only difference between the charging section in that case and the section which was considered by the Patna High Court was the existence of a proviso to Section 3 of the Madras Act. We shall read the section as well as the proviso:--
'Levy of tax on passengers and goods--From and after the commencement of this Act. there shall be levied and paid to the Government, a tax on all passengers, luggage and goods carried by stage carriages, and on all goods transported by public carrier vehicles, at the rate of nine pies in the rupee on the fares and freights payable to the operators of such stage carriages and at the rate of six pies in the rupee on the freights payable to the operators of such public carrier Vehicles:
Provided that the fare charged by an operator inclusive of the tax leviable under this section, shall not exceed the maximum fare prescribed by the Government under the Motor Vehicles Act, 1939, and in force at the commencement of this Act;'
We are leaving out the second proviso to the Section as it is not material for our purpose. Construing the section, their Lordships, Chief Justice Rajaman-nar and Justice Venkatarama Aiyar came to the conclusion that it was possible to discern from the charging section as well as the proviso that the incidence of the tax was on the passenger and the goods.
They also referred to the decision in the Patna case which we have adverted to and observed as follows:--
'It was held in the above Patna case that although the statute did not expressly authorise the carriers to collect the tax from the passengers and consignors of goods, yet the statute must be construed to have implicitly granted this right to them. Both the main provision as well as the first proviso of Section 3 of the Madras Act also appear to indicate that the tax can be passed on to tha passenger or consignor of goods, though there is no express provision to that effect. If the tax leviable under the section is not contemplated as one which would be eventuallv collected from tha passenger or consignor, the proviso becomes unintelligible, because it speaks of the fare charged by an operator inclusive of the tax leviable under the section.'
So it was ruled that the Act was not incompetent as one imposing a tax on the income of the operator.
12. These decisions of the Patna and Madras High Courts were noticed by the Supreme Court in construing a similar enactment passed by the Rajasthan State where again the same conclusion has been reached. We may refer to the decision in Sainik Motors, Jodhpur v. State of Raiasthan. AIR 1961 SC 1480. In Sections 4 and 5 of the Statute that was considered by the Supreme Court, the Raiasthan Passengers and Goods Taxation Act (18 of 19591, there were indications that the tax imposed was on the passenger and or the owner of the goods. But the passage in paragraph 9 of the Judgment clearly indicates that Courts have been consistently taking the view that similar enactments are intended to impose tax on the passenger and goods. We may usefully extract a portion of paragraph 9 of the judgment in the case:--
'(9) .....The explanation to Section 3 (1) lays down that even if passengers are carried or goods transported without the charge of fare or freight, the tax has to be paid as if fare or freight has been charged. This clearlv shows that the incidence of the tax is upon passengers and goods, though the amount of the tax is measured by the fares and freights. A similar argument was not accepted by the Madras High Court in Mathurai Pillai v. State of Madras, ILR (1954) Mad 867-(AIR 1954 Mad 569), and the same view was expressed in Atma Ram Budhia V. State of Bihar, ILR 31 Pat 493=(AIR 1952 Pat 359) (SB). In our opinion, the charging section does not go outside Entry No. 56. .....'
To complete the series, we may also refer to two other decisions. The MadhyaPradesh High Court in Madhya Pradesh Transport Co. Private Ltd. v. State of Madhya Pradesh, AIR 1962 Madh Pra 108, took the same view.
It is unnecessary to go into details excepting to state that the only further thing discernible from the statute of the Madhya Pradesh case so far as the charging section is concerned is the inclusion of the words '(inclusive of tax)' within brackets after the word 'fare' occurring in the charging section. The statute was construed as imposing a tax on the passenger and on the goods. The Mysore High Court also took the same view in H. K. Swaranavar Nashar v. State of Mysore, AIR 1963 Mys 49. Though reported in 1963, this decision was rendered as early as 1961.
13. It is in the wake of these pronouncements that the Act came to be passed. The charging section, the preamble and Section 19 clearly indicate that the purpose, the scope, the ambit and the effect of the Act cannot be or was never intended to be anything different from those of the enactments which have been discussed and construed in the decisions already referred to by us. We therefore accept the argument of counsel for the State based on the contentions raised in the counter affidavits filed in these cases that the Act is a statute imposing a tax on passengers and goods and not an enactment imposing a tax on the operators or on their income or on the fares and freights. It is no doubt true that on the operators have been cast onerous tasks in the form of submitting returns, of paying the tax, of facing prosecution or injunctions against running of vehicles if taxes have not been paid or returns have not been submitted. But these are familiar provisions resorted to by legislatures, and justifiably we think, because it has not been urged before us that the legislature cannot choose the most convenient point or convenient person from whom a tax imposed by a State is to be collected. We therefore understand the various provisions in the Act which have been adverted to by us and which have been relied on by counsel appearing for petitioners, as only enabling provisions made in the statute for the purpose of facilitating the collection of tax imposed by the statute. This tax, as we understand the statute and for the reasons that we have stated, is a tax on the passenger and/or on the goods.
14. But before leaving this aspect, we must notice the argument advanced by counsel that Item 56, of List II of the Seventh Schedule to the Constitution is comprehensive enough to enable the legislature to impose a tax on the operator. This point was urged by counsel appearing for the State mainly on the basis of the observations contained in twojudgments of the Supreme Court; one in Rai Ramakrishna v. State of Bihar, AIR1963 SC 1667 and the other in Khyerhan Tea Co. Ltd. v. State of Assam, AIR1964 SC 925. It is contended by counsel for the State on the basis of the observations contained in paragraph 13 of the judgment in AIR 1963 SC 1667 that the Supreme Court has pronounced that a tax can be imposed on a person other than the owner of the goods (the enactment in question related to a tax on the carriage of goods). On the other hand, counsel for the petitioners urged that these observations must be understood in the light of the clear decision of the Court that the statute considered therein is a statute imposing tax on passengers and goods.
Similar observations are contained in paragraphs 19 to 23 of the Judgment in AIR 1964 SC 925. And these have also been relied on by counsel on behalf of the State and have been tried to be explained by Counsel for the petitioners. We do not regard these observations as conclusive. The only decision in which a clear and categorical view has been expressed is the decision in O. P. 396 of 1966 of this Court dismissing the Original Petition in limine. The correctness of this decision has been challenged before us by counsel on behalf of the petitioners. As we said the question does not arise in view of the definite pleading by the State that the tax in question is only one on the passengers and our finding that the Act has imposed the tax on the passenger and goods. We therefore express no opinion about the correctness or otherwise of this decision. This may have to be considered when the occasion arises.
15. Coming now to the arguments advanced by counsel on the basis of Article 14 of the Constitution, the provisions in the Act relied on by counsel for so contending are those contained in the second proviso.to Section 3, explanation 2 to the same section and Section 18. The second proviso to Section 3 states that 'no tax shall be levied on any passenger, luggage or goods carried in a stage carriage, if the total distance permitted to be covered by such stage carriage in a day, does not exceed eighty kilometres'. And Explanation 2 (ii) states that 'no tax shall be payable under this Act on goods carried by any vehicle owned by any department of the Central Government or by the Railways.' Section 18 states that the particular class of co-operative societies detailed in that section need pay only one half of the rates payable under this Act.
16. It is contended that to state that the tax payable by a passenger or owner of goods must depend not on the distance that he travelled, or the distance for which the goods were carried but on the totaldistance that the vehicle travelled a day is a provision discriminatory and without any rational basis because it will depend upon the accident of a person getting into one or other of the vehicles, one travelling less than 80 kilometres and the other travelling beyond 80 kilometres; the first not having to pay tax, the second having to pay the full tax. Similar is the argument with reference to the vehicles owned by any department of the Central Government or by the Railways. If the statute is a statute imposing tax on the passengers and goods, as we have held it is, the discrimination, if any, affects the passenger or the owner of the goods and not the writ petitioners before us who are nearly six hundred in number. None of them is a passenger or owner of goods. We do not think therefore that this is a point that the petitioners are entitled to raise in this batch of cases. For the same reason we are unable to hold that Section 18 is discriminatory.
It is no doubt contended in the counter affidavit that has been filed that there is a reasonable classification and the intention is to help co-operative societies, that co-operative societies are permitted to retain one-half of the collection made by them, that is, such of those co-operatives that fall under Section 18. We do not think there is any basis for this contention. The tax is to be paid by the passenger and the concession contained in Section 18 must also be a concession to the passenger concerned. What justification there is for these concessions it is not for us to consider in these cases because no passenger or owner of goods is before us.
17. Next we pass on to the alleged violation of Article 19 of the Constitution. The mere imposition of a tax by itself cannot be said to infringe Article 19 of the Constitution. Tax laws are not beyond the clutches of Article 19 when the Court is satisfied that by the impost of the tax there has been a crippling of trade or business. Constitutional authorities have clearly stated and this has been accepted by the highest Court in this country that a power of taxation is a sovereign power of the State which should not ordinarily or lightly be interfered with by the Courts. We may refer to a passage from Cooley's Constitutional Limitations in this regard:--
'The power to impose taxes is one so unlimited in force and so searching in extent, that the Courts scarcely venture to declare that it is subject to any restriction whatever, except such as rest in the discretion of the authority which exercises it,'
And Marshall, Chief Justice in Mc Cullock v. Maryland, (1819) 4 Law Ed 579 observed:--
'The power of taxing the people and their property is essential to the very existence of the Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself.'
18. Wide as these observations are, we are aware that our Courts have taken the view that in a given circumstance there is power in the Court to scrutinise the effect of a tax and see whether it is violative of Article 19 of the Constitution. Whatever that be, we do not think that the Act has imposed any such restriction on the petitioners before us. We have said that they have been utilised, if we may use that word, merely for the purpose of facilitating the collection of the tax that has been imposed, as we have held, on the passengers and the owners of the goods by the Act. This being so it is idle for them to urge that they can rely on Article 19 of the Constitution. So we negative this contention as well.
19. This leads us to the contention raised by counsel on behalf of the petitioners that the Act impugns Part XIII of the Constitution, particularly Article 301 and that it does not satisfy the requirement of Article 304(b). It is no longer open to any person to contend that a taxing statute is beyond the purview of the restrictions and limitations imposed by Part XIII of the Constitution. The matter has been set at rest by the Supreme Court in Atiabari Tea Co. Ltd. and Khayerbari Tea Co. Ltd. v. State of Assam, AIR 1961 SC 232. We shall refer to the relevant passages from the judgment dealing with the effect of taxes of this nature imposed by statutes on Article 301. After an analysis of the provisions of the Constitution, particularly those contained in Part XIII thereof, their Lordships of the Supreme Court observed:--
'Thus the intrinsic evidence furnished by some of the articles of Part XIII shows that taxing laws are not excluded from the operation of Article 301 which means that tax laws can and do amount to restrictions freedom from which is guaranteed to trade under the said Part. Does that mean that all tax laws attract the provisions of Part XIII whether their impact on trade or its movement, is direct and immediate or indirect and remote? It is precisely because the words used in Article 301 are very wide, and in a sense vague and indefinite that the problem of construing them and determining their exact width and scope becomes complex and difficult. However, in interpreting the provisions of the Constitution we must always bear in mindthat the relevant provision 'has to be read not in vacuo but as occurring in a single complex instrument in which one part may throw light on another' .....Thus considered we thinkit would be reasonable and proper to hold that restrictions freedom from which is guaranteed by Article 301, would be such restrictions as directly and Immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of Article 301. The argument that all taxes should be governed by Article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld. If the said argument is accepted it would mean, for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill mav indirectly affect trade or commerce. We are, therefore, satisfied that in determining the limit of the width and amplitude of the freedom guaranteed by Article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement?'
Their Lordshios then considered the material provisions of the Act, Assam Taxation (on Goods carried by Roads or Inland Waterways) Act (13 of 1954), and came to the conclusion:--
'It is thus obvious that the purpose and object of the Act is to collect taxes on goods solely on the ground that they are carried by road or by inland waterways within the area of the State. That boing so the restriction placed by the Act on the free movement of the goods is writ large on its face. It may be that one of the objects in passing the Act was to enable the State Government to raise money to keep its roads and waterways in repairs; but that object may and can be effectively achieved by adopting another course of legislation; if the said object is intended to be achieved by levying a tax on the carriage of goods it can be so done only by satisfying the requirements of Article 304(b)'.
20. The provisions of the enactment considered by the Supreme Court in the case referred to are similar, if not identical to those contained in the Act excepting that the Act imposes a tax on passengers in addition to goods. So the dicta which we have extracted must apply in testing the validity of the Act So we have to hold prima facie that Article 301 is attracted and has been infringed by the Act and it can only be saved if the provisions in Article 304(b) have been complied with. It is the case of the State that these provisions have been complied with. Before we come to this question, we mav refer to the other pronouncement of the Supreme Court which has modified to some extent what is stated in the decision just referred to. The case we have in mind is the one in Automobile Transport Ltd.. etc. v. State of Rajasthan, AIR 1962 SC 1406.
It has been held therein that regulatory and/or compensatory taxes will not attract Article 301 of the Constitution at all. In other words when the tax is purely of a regulatory nature or even if it is a compensatory one there is no question of Article 301 being violated and naturally the statute need not comply with the provision in Article 304(b). We must however hasten to add that the question as to whether compensatory taxes are outside the ambit of Article 301 is a matter still open notwithstanding the pronouncement contained in the decision in AIR 1962 SC 1406, for in a later judgment in AIR 1964 SC 925, Justice Gajendragadkar said that the question, raised for consideration again in that case would have been referred to a larger Court if it was necessary to decide it. We may extract the passage in question:--
'It would immediately be noticed thatthough the majority view in the Automobile Transport (Rajasthan) case, (1963) 1 SCR 49l = (AIR 1962 SC 1406) substantially agreed with the majority decision in the case of Atiabari Tea Co., (1961) 1 SCR 809 = (AIR 1961 SC 232) there would be a clear difference between the said two views in relation to the scope and effect of the provisions of Article 304(b), According to the majority view in the case of Atiabari Tea Co., (1961) 1 SCR 809=(AIR 1961 SC 232) if an Act is passed under Article 304(b) and its validity is impeached, then the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in the public interest, and in doing so, it may for instance, rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan) case. (1963) 1 SCR 491=(AIR 1962 SC 1406) compensatory taxation would be outside Article 301 and cannot, therefore, fall under Article 304(b). If in the present case it had been urged before us that the tax levied by the Act is compensatory in character, it would have been necessary to consider the question once again by constituting a larger Bench......If the Act had been compensatory in character, it would have become necessary for us to consider the whole positiononce again, because it would obviously be unfair and unjust that the earlier Act should have been struck down though it was compensatory in character and in testing the validity of the present Act, it should be open to the petitioners to contend that its compensatory character is irrelevant to the enquiry under Article 304(b) .....'
21. So it may now be taken that a merely regulatory measure will not attract Part XIII of the Constitution and there can be no question of violation of Article 301 and therefore no necessity to satisfy Article 304(b). It is not however possible to go any further than that.
22. The Act is not a purely regulatory measure. It is a taxing statute. It Impugns Article 301 and it can stand only if it satisfies Article 304(b). According to the State, the statute only imposes reasonable restrictions in the public interest. And counsel has been at pains to point out that the impact of the various taxes imposed by the Vehicles Taxation Act and the Act in this State compare very favourably with the burdens imposed by similar enactments in the State of Madras and Mysore or even in Bombay and it is urged on the basis of the statements contained in paragraphs 17 to 20 of the counter-affidavit in O. P. No. 535 of 1967 that we must hold that the impost is a reasonable restriction in the public interest.
23. The two cases which went up to the Supreme Court where the question had been considered and where it has been held that the impost of a tax is reasonable and in the public interest are reported in AIR 1962 SC 1406 and AIR 1964 SC 925. In both these cases data was furnished before the Court and it was proved to the satisfaction of the Court that the impost was only for the purpose of covering the expenses of maintaining the roads or the inland waterways which the Court held afforded facilities for the free flow of trade and in fact contributed to the growth of free trade and intercourse.
In the earlier case it was found that the amount collected by way of tax under the particular statute was less than half of the amount spent for the maintenance of roads. And in the latter case though it was not urged by the Attorney-General that the tax in question was of a compensatory nature, he relied on the details furnished for the purpose of establishing his contention that enormous sums of money had been spent for the purpose of maintaining the inland waterways and the tax collected under the Statute is only a small portion of those expenses. So it was held that the tax was reasonable and in the public interest. Unfortunately lor us, we have no material before us.
The statements in the affidavits that have been filed do not contain the details on the basis of which it is possible to come to any conclusion as to whether this tax is of the nature of the taxes imposed by the statutes which were considered by the Supreme Court in the decisions referred to. Strictly speaking in the absence of specific details furnished before us we should accept the statements contained in the affidavits in support of the petitions and hold that the Act impugns Article 301 and it has not been established before us that Article 304(b) has been satisfied. The observations of the Supreme Court in AIR 1963 SC 1667 indicate that when once the infringement of Article 301 is established, the burden is on the State to show that notwithstanding the infringement, restrictions imposed by the Act are reasonable and in the public interest. But we think that there will be miscarriage of justice if we come to a conclusion on insufficient data.
And we consider it inappropriate to strike down a statute which has been in the statute book for more than four years now, on mere burden of proof or lack of material- In fact we are unable to pronounce on this subject without the additional facts being placed before us. We therefore direct the State to file additional affidavits before this court giving details regarding the amount collected by way of tax under the impugned Act and the amount, if any, spent for the purpose of maintaining or making roads or for such other activities as will facilitate the free flow of trade, on or before 28-2-1968. At least 7 days before that date, the affidavits must be made available to counsel for the petitioners in these cases and they will file replies before the hearing date which we fix as 28-2-68.
24. The only remaining question, by no means the easiest one, remaining for decision, apart from the violation of Article 301 of the Constitution, the decision on which we have deferred, due to lack of material, is the point raised by counsel on behalf of the petitioners that the Act if it imposes a tax on the passengers and on the owners of the goods is incomplete and ineffective and ought not to be allowed to be enforced as against the operators in so far as there is no provision made in the statute and/or under the Rules framed under the statute obliging the passengers or the owners of the goods to pay the tax imposed by the Act to the operator or for that matter enabling the operator to collect the tax imposed from the passengers or the owner of the goods. And the lack of such a provision is a lack of a law in regard to the collection of tax and is therefore violative of Article 265 of the Constitution.
Article 265 injuncts the levy and collection of tax without the authority of law. It is said the term 'levy' will comprehendthe charge as well as the means by which the amount of the tax is to be computed, and the collection thereafter of the tax so computed will also have to be provided by law. It is said that the provisions in the Act to which we have referred only provide for the levy of tax. It is contended that there is no law at all regarding the collection and without such a law this Act can have no effect and any insistence of payments by the petitioners of the tax due is an insistence without the backing of law. In answer to this contention counsel for the State has urged that provision has been made though not expressly by sections in the Act by the necessary intendment thereof, that the passengers and the owners of the goods should pay the amount of the tax to the operators, and that factually there has been an enhancement of the fares payable by the passengers as well as the owners of the goods or at least those who booked the goods for transport by directions being issued under Section 43 of the Motor Vehicles Act, and by the issuance of a notification by the State Transport Authority under Section 44(3) of the same Act.
Factual details regarding the enhancement in the fares are furnished in the counter-affidavit in paragraphs 11, 12 and 13 in O. P. No. 535 of 1967 and on the basis of those averments it is urged that there has been a 20% increase in the fare charged before the Act was brought into operation from the time the Act as well as the new fare came into effect, namely, on 1-7-1963. It is therefore said these are not cases where any impost has been made on the petitioners without the petitioners having recourse to the passengers and goods and therefore there has been nothing illegal and it is even urged that a provision for recovery from the passengers in the manner in which it has been done is justifiable because for that procedure, the authority of law is the impost made by the Act on the passengers and goods. In other words the argument is that if the Act has imposed an obligation on the passenger and the owner of the goods that the tax under that Act should be paid by them appropriate provision can be made by the State even by relying on laws, other than the Act, namely, the Motor Vehicles Act and if that has been done, this Court should not interfere. A passage from Corpus Juris Secundum (Vol. 32, Section 73, at p. 131) which has been quoted by Chief Justice Dixit in the judgment in AIR 1962 Madh Pra 108 has been relied on by counsel on behalf of the State. This passage is in these terms:--
'A statute imposing a tax must provide workable means of ascertaining the amount of tax to be paid. But it is not necessary to make specific provisions as to such matters concerning the enforcement of the tax as may be properly provided by reference to other laws.'
25. Here it is urged that the Act has provided not only workable means of ascertaining the amount of tax to be paid but has clearly specified the quantum of the tax and provision has been made and has been properly made by reference to the Motor Vehicles Act. In fact in the decision of the Madhya Pradesh High Court AIR 1962 Madh Pra 108 wherein this passage has been quoted their Lordships adopted the method of giving a direction that the State Government should give directions under the Motor Vehicles Act to enable the operators or owners of the vehicles to collect the tax imposed by the impugned Act and that it could be collected as part of the fare. So the fare was directed to be raised by resort to the provisions in the Motor Vehicles Act so as to include the tax as well. Before we refer to these passages in the judgment which follow the earlier pronouncement of the Court on the same subject it is necessary to advert to certain aspects of the matter.
26. As we read the Motor Vehicles Act, it is not a law for the purpose of enabling the collection of any tax imposed by any other statute. This is a regulatory measure in relation to the matters provided in that statute. Provision has been made for the State to give directions to the State Transport Authority. That provision in so far as it pertains to directions relating to fares and freights is contained in Section 43 wherein subsection (1) states with reference to what matters the directions enumerated under that section can be given. The matters are the advantages offered to the public, trade and industry by the development of motor transport, the desirability of co-ordinating road and rail transport, the desirability of preventing the deterioration of the road system and the desirability of preventing uneconomic competition among motor vehicles. And by notification in the official Gazette it is pro-vided that the State Government may issue directions to the State Transport Authority, inter alia, regarding the fixing of fares and freights for stage carriages, contract carriages and public carriers.
Section 44 (3) states that a State Transport Authority shall give effect to any directions issued under Section 43, and subject to such directions and save as otherwise provided by or under the Act shall exercise and discharge all the functions stated in that section. By virtue of Section 59 it is provided that any prohibition or restriction imposed and anymaximum or minimum fares or freights fixed by notification made under Section 43 shall be a condition of a permit. Section 60 provides that any violation of any condition of the permit may entail suspension or cancellation of the permit. These provisions as we understand them are made purely for the purpose of the Motor Vehicles Act. We are not for a moment suggesting that any tax the incidence of which is purely on an operator need not be taken into account or is not a relevant factor in the issuance of directions relating to fares under Section 43 by the State or in the fixation by the State Transport Authority of fares, subject to those directions, under Section 44 (3). But if the tax is not on the operator and is an impost on the passenger or on the owner of the goods as we have held that it is under the Act, we do not think it is a relevant consideration at all in the matter of giving directions under Section 44 (3) or in the matter of fixation of the fares under Section 44 (3) by the State Transport Authority,
Apart from this we also consider that when a taxing statute has imposed a tax on a particular class of persons that statute or at least the rules framed under the statute must itself provide for the payment and the collection of the tax from such persons as are made liable by the impost. We say so because the amount of the tax payable by the person who has been taxed must be the precise amount imposed and it must be possible to discern in every case, this has been claimed from that person. The amount claimed must be neither more than the tax imposed nor less. If more is claimed from the passenger or the owner of the goods there will be no authority of law for it. And if only less is claimed the operators will have to make up the difference for which also there is no authority of law. So it must be ensured that the precise amount alone is collected from the passenger and the owner of the goods. This cannot be achieved by the method said to have been adopted viz., fixation of enhanced fare under the Motor Vehicles Act.
For instance with all the materials placed before us we are unable to say whether the entire liability imposed by the tax on the passenger and the owner of the goods has been recovered from them or whether more has been recovered. For notwithstanding the fact that there has been an increase of 20 per cent in the fare that was obtaining before the Act was brought into operation on 1-7-1963 we are unable to say what fraction of 20% is to provide for increased operational expenses which must have increased since the previous fixation of fare, and which fraction is to provide for the tax. This we think therefore is a very unsatisfactory way of making provision forthe collection of a tax imposed by astatute. We are no doubt aware that the Madhya Pradesh High Court in AIR 1962 Madh Pra 108 took a different view. Perhaps this was for the reason that the charging section in the statute considered therein had itself provided for the fare 'inclusive of tax'. The relevant part of the section (Section 3 of Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act, 1959), is in these terms:--
'there shall be levied and paid to the State Government a tax. ..... at a rateequivalent to ten percent, of the fare (inclusive of tax) payable to the operator of a stage carriage.' Their Lordships came to the conclusion that the passenger has to pay the fare and the tax and that it will be a proper method to make provision by directions under Section 43 and by fixation under Section 44 (3) of the Motor Vehicles Act. They relied on a passage from an earlier judgment to the following effect:--
'The contention that under Section 43 the maximum fares that could be charged had already been fixed and unless these were revised as provided In that section the operator could not be permitted to charge a higher fare, proceeds on a misreading of the section which, as amended, permits the State Government to issue directions to the State Transport Authority from time to time regarding the fixing of fares for stage carriages etc. The Regional Transport Authority, therefore, can refix the fare table and so amend the permits as to permit the operators to charge amended fares inclusive of the passenger tax, which they were not liable to collect from the passengers as agents of the State'. After quoting the above passage, their Lordships observed that: 'Until the fare tables are revised there is no liability on the operator to collect the tax from the passengers ..... so long as the fare table is not revised for enabling the operator to recover the tax amount from the passengers as extra fare, no liability of any kind under the Act can be fastened upon the operator.'
27. For the above reasons all the writ petitions were allowed and the respondents were prohibited from enforcing the provisions of the Act as against the petitioners unless arid until the fare tables in respect of their stage carriages were revised under Section 43 of the Motor Vehicles Act.
28. The Madras High Court in dealing with a similar matter arising out of a proviso to the charging section of the Act that was considered in AIR 1954 Mad 569 which proviso inhibited the operators from collecting the tax from the passengers in cases where they had already been charging the maximum fare fixed underthe Motor Vehicles Act, ruled that the proviso can have no effect so far as the petitioners before the Court were concerned. The proviso is in these terms:-
'Provided that the fare charged by an operator inclusive of the tax leviable under this section, shall not exceed the maximum fare prescribed by the Government under the Motor Vehicles Act. 1939, and in force at the commencement of this Act;'
29. The Madhya Pradesh High Court (AIR 1962 Madh Pra 108) ruled that no liability can be fastened upon the operator until the fare tables are revised under the Motor Vehicles Act. The Madras High Court (AIR 1954 Mad 569) on the other hand, said that the inhibition in the proviso will not be applied to the petitioners before the Court. In other words, the petitioners, the operators, were permitted to collect the tax from the passengers and the owner of the goods.
The State Government here seems to have adopted the procedure indicated in the Madhya Pradesh High Court decision. We have already stated our reasons for holding that this is not a proper or satisfactory method. We are not now in a position to sav that the liability imposed by the Act has not been absorbed by the increase in fare that has been introduced as a result of the enhancement in fare effected from 1-7-5963. But we are equally unable to say that it has been so absorbed. This is what results from the adoption of a method such as the one that has been resorted to in this case.
30. So we think that a direction must be issued that provision must be made for the collection of the tax from the passenger as tax specifying the quantum calculated and computed on the basis of the provision in the Act. This will of course be payable to the operator who has been made liable to pay the tax to the State. It is not for us to suggest the manner in which this should be done. Perhaps this can be achieved by amending the statute by making specific provisions in the Act. It can even be done perhaps by framing Rules under Section 20(g) which we have already read. Rules made under similar statutes had been relied on by courts as early as in the case of AIR 1952 Pat 359 (SB), for the purpose of construing the purpose of the Act. As we said, It is for the State Legislature and/or the State Government to take such steps as are necessary to provide the machinery. We direct that this should be done as expeditiously as possible.
31. It is not possible to dispose of these writ applications without determining the questions raised about violation of Article 301. So we adjourn thehearing of the case to the 28th of this month.
32. By our order dated 2-2-1968, we directed that the State should file additional affidavits giving details of the amount collected by way of tax under the impugned Act and the amount. If any spent for the purpose of maintaining or making roads or such other activities as would facilitate the free flow of trade. An affidavit sworn by the Deputy Secretary to Government P. W. D. on the 20th February. 1968. has been filed by the State on 22-2-1968 in O. P. No. 535 of 1967. It is stated therein that prior to the passing of the impugned Act the tax levied under the Travancore-Cochin Motor Vehicles Taxation Act in the Tra-vancore-Cochin area, and the Madras Motor Vehicles Taxation Act, and the Madras Motor Vehicles (Tax on Passengers and Goods) Act in the Malabar area, was the only source of direct revenue to be expended 'for opening new roads, and for maintaining the existing ones in proper condition, by improving the road surfaces by concreting, black-topping, metalling etc. .... and for payingcontributions to local bodies for the proper upkeep of the roads within their control'. It is claimed that the Government have been expending far beyond the revenue collected by it under the above Acts for the last five years and An-nexure-D has been filed in support of this claim. It is further said that 'in order to provide increasing trade and commerce facilities, by making, and maintaining roads in good condition, the State had to augment the sources of its revenue'. It is suggested that the impugned Act was made in 1963 for that purpose.
With reference to Annexure D to the affidavit already referred to, it is averred that 'though in the last three years the taxes collected under the two Acts together, have slightly exceeded the actual amounts spent for maintaining the existing roads and making new ones and also bridges etc. the fact remains that all along, amounts corresponding to the bulk of the tax, if not the entire tax, collected under the two Acts, has (have?) been spent for providing increasing facilities for trade, commerce and intercourse.
Reference has been made in the affidavit to Annexure A which, it is said, gives a correct account of the amounts collected by the State under the Kerala Motor Vehicles Taxation Act and the impugned Act for the five years from 1962-63. The amounts alleged to have been expended for construction and maintenance of roads and bridges including the schemes assisted by the Government of India are furnished in Annexure B, Administration expenses under the Motor Vehicles Taxation Acts and expenses towards payment to local bodies are de-tailed in Annexure C. On the basis of these, it is claimed that 'the revenue raised by the new impost under the impugned Act, does in fact, serve a vital public purpose viz., the opening of new roads and bridges, and the maintenance of the old ones in proper condition thereby securing and increasing the free flow of trade, commerce and intercourse within the State and between the States'. It is therefore submitted 'that the tax levied under the impugned Act is within the scope of Article 304(b) of the Constitution of India as the lew imposes only reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as are required in the public interest.'
33. From Annexure D it is seen that amounts in excess of those collected under the Motor Vehicles Taxation Act, which is seen from Annexure A have been expended for the purposes detailed in Annexures B and C. The amount so in excess was over 3 crores in the year 1962-63, over 1 1/2 crores in the year 1963-64, nearly a crore in the year 1964-65 and 34 lakhs and odd and 40 lakhs and odd for the years 1965-66 and 1966-67. The expenditure incurred exceeded the total collections according to Annexure D for the years 1962-63 and 1963-64, but was less than 41 and odd lakhs in the year 1964-65, a crore and 8 lakhs and odd in the year 1965-66 and 61 lakhs and odd for 1966-67.
34. A reply affidavit has been filed by the petitioner in O. P. No. 930 of 1967 to the State's supplementary affidavit dated 20-2-1960. Briefly stated, two contentions have been raised in this reply. The first of these relate to the figures furnished in Annexures A to D of the supplementary counter affidavit. It is said that large sums received from the Central Government towards centrally sponsored schemes; viz.. (1) roads of inter-State or economic importance and (2) west coast roads, have not been included in Annexure A, though full expenditure pertaining to them have been detailed in Annexure B. It is also pointed out that though an item of expenditure such as 'for inspection of motor vehicles' for the year 1962-63 amounting to Rs. 2,28,500/- has been claimed in Annexure C, the corresponding receipts under the same head. Head XI (a), which it is said was 42 lakhs and odd rupees has not been included in the receipts in Annexure A or Annexure D.
35. The second contention raised is that the expenditure actually incurred by the State in relation to the items detailed in Annexures B and C can be met exclusively from the collections under the Motor Vehicles Act and the collections under the Motor Vehicles Taxation Act if credit is also given to the subsidies tothe State Government from the Central Government. So it is urged that it was quite unnecessary to have imposed the tax under the impugned Act as the actual expenditure incurred by the State could have been easily met from the other resources. The impost under the impugned Act is therefore an unreasonable restriction and does not serve any public interest.
36. In support of the contentions re-lating to the mistakes in the Annexures to the supplementary counter affidavits which we have referred to, reliance has been placed on the Second Five Year Plan Kerala. Review of the Progress of Schemes, issued by the Planning Department page 49, wherein reference has been made to the two centrally sponsored schemes (1) roads of inter-State or economic importance and (2) west coast roads, as well as to the Third Five Year Plan, Policy and Programme, also issued by the Planning Department, Government of Kerala page 144 where again there is a reference to roads of inter-State or economic importance and (2) west coast roads, which are described as falling under the centrally sponsored scheme, Reference was also made to the Administration Report of the Public Works Department for the vear 1960-61 page 30, wherein is seen Statement No. 1-C, 'Statement of receipts under Revenue', during 1960-61, and it was urged that large sums, over 80 lakhs of rupees have been received by the State as subventions from Government of India. It is urged that similar if not substantially higher amounts must have been received from the Central Government during the subsequent vears as well and that these have not been included in Annexure A or Annexure D, to the supplementary affidavit.
Reference was also made to the Administration Report of the Motor Vehicles Department for the year 1962-63 and it was pointed out under the Head XI (a), (Receipt under Motor Vehicles Act), 42 lakhs and odd rupees have been received by the State for the year 1962-63 and that such income has not also been included in any of the statements annexed to the supplementary counter-affidavit (See Statement No. XIII at page 90 of the Report) Further from Statement No. XIV (also at the same page of the Report) it was pointed out that the expenses in connection with the inspection of the Motor Vehicles fall under the Head XI (a) and that it is referable to the receipts under the same head and has therefore been wrongly included in Annexure C to the State's supplementary affidavit as the income from that source has not been taken into account. It is submitted that though figures for the year 1962-63 alone have been made avail-able to the Court, similar must be the position in the subsequent years as well.
It is therefore vehemently contended that the tax under the impugned Act is unnecessary for meeting the expenses. The tax imposed by the impugned Act, it is urged, is not only not compensatory but the restrictions resulting from the imposition of the tax are not reasonable and are not in the public interest.
37. The question is whether in the circumstances disclosed it can be said that the provisions of Article 304(b) of the Constitution have been satisfied. It is necessary to read certain pages from the decision of the Supreme Court in answering this question. We must refer to the passages in paragraphs 38 and 39 of the judgment of Justice Gajendragadkar in AIR 1964 SC 925.
'(38) On the other hand, Mr. Setalvad strongly urges that the tax constitutes a reasonable restriction in the public interest, because it purports to raise revenue for public purposes. As we have already seen, tax laws have to stand the scrutiny of Article 19. That being so as soon as the validity of a tax law is challenged under Article 19, the State would be entitled to rely on the fact that the revenue raised by the tax law serves public purpose and that is its basic justification for being treated as a reasonable restriction on the individual's fundamental right under Article 19(1)(g). It would, therefore, follow that the consideration on which Mr. Setalvad relies is not irrelevant, though its significance and importance cannot be over-rated. In this context it may, however, be legitimate to bear in mind that the revenue is required by the State to raise money in order to carry on the function of Government and to sustain the manifold welfare activities undertaken by it. Similarly, the fact that the President has given previous sanction to the introduction of the Bill may conceivably be relevant because the Constitution seems to contemplate that the sanction of the President would indicate that the Central Government had applied its mind to the problem and had come to the conclusion that the proposed tax is reasonable and in the public interest. But we must hasten to add that the significance of this consideration cannot also be exaggerated,
(39) Mr. Setalvad urges that evidence in the case shows that the State has levied the tax on the goods carried because it wants to utilise the income for the purpose of keeping the roads in order and to meet the huge expenses incurred in maintaining the waterways in the State. In the affidavit filed on behalf of the respondents, details have been given about the expenditure incurred by the State on roads and waterways from year to year, and the revenue received by itfrom the carriage tax during the same period. The affidavit points out that tea and the jute are the main products of the State of Assam and in order to have a regular and easy flow of trade, the State has to maintain the roads. The trade in these commodities through waterways is cheaper and, therefore, the State has also to incur large sums on maintaining the waterways. The statement filed in the affidavit clearly showa that every year the expenditure incurred is very much more than the revenue received from carriage tax. It. may perhaps be that since the ton-mileage method has not been adopted in imposing the tax, the State may not be able to claim thai the tax is compensatory in character. Usually, compensatory character may be claimed for a tax of this kind, provided the extent of the service rendered by the State by raising the tax is shown and it is also proved that the recovery of the tax has some relation to the rendering of the said service. That is why Mr. Setalvad has not argued that the tax in question is compensatory in character, He, however, suggests that under Article 304(b) it would be open to him to sustain the restriction imposed by the tax on the ground that the tax is levied not merely to raise general revenue for the State which itself is a public purpose, but that the tax is raised and utilised for keeping the waterways and the roads in good condition in the State. In our opinion, there is considerable force in these contentions.'
We must also refer to the observations of Justice Sarkar in paragraph 69 of His Lordship's Judgment in the same case.
'(69) Now let me look at the question from another point of view. To start with it would not be wrong to say that since a tax is collected in public interest and for public good the burden imposed by it on trade would prima facie be reasonable in the public interest. There is no reason to think that the burden imposed by this Act is erroneous (so onerous?) that it is such as would crush the trade by putting a weight on it which it could not carry. Furthermore it has been established on the affidavit that the Government spends on roads and facilities on waterways much more than what is collected in the shape of tax on the goods carried. That also is a consideration which goes to establish the reasonableness of the levy. The petitioner has not been able to put before us anything which would destroy the effects of these considerations. The fact that the Act imposes the tax with retrospective effect cannot by itself also make the restriction unreasonable. For the reasons earlier mentioned, it may still be reasonable.'
38. The consideration that weighed with their Lordships, namely, that the burden imposed by a tax on a trade would prima facie be reasonable and in the public interest because it is intended for raisins money 'in order to carry on the function of government and to sustain the manifold welfare activities undertaken by it' holds good in this case as well. The fact of Presidential sanction for the Act has also to be given its due weight and importance.
We have held that the tax imposed by the impugned Act is on the passengers, collectible from the operators, who could, and should reimburse themselves irom the passengers. And there is therefore no question of the tax imposed casting such burden as would crush the industry or drive it out of existence.
39. The only factor which is absent is the fact that it has not been established before us that amounts in excess oi, or even equal to, what has been collected under the impugned Act as well as the Kerala Motor Vehicles Taxation Act have been expended on the various activities which arc intended lor the reconstruction or opening of new roads and bridges and for maintaining and improving roads and in order to provide facilities for increased flow of trade, commerce or intercourse. The question is whether such proof is necessary in relation to the working of each year or a small group of years before it can be said that the requirements of Article 304(b) have been satisfied. In answering this question, we think that it must be borne in mind that it would be not only inadvisable but dangerous to view the position with reference to the working of the statute for a short period. In this case the impugned Act has been in force throughout the year only for the three years 1964-1965 and 1965-1966 and 1966-1967.
During these years even according to the statement furnished in Annexure D to the supplementary counter affidavit the receipts have been in excess of the expenditure. But it is significant that the expenditure for these years have been considerably less than the expenditure for the two previous years 1962-63 and 1963-64, In fact if the total amount expended for the year 1962-63 which is over rupees 5 crores and 80 lakhs has been expended in the three years 1964-65, 19135-66 and 1960-1967, there would have been no surplus income for the years 1964-65 and 1966-1907 and only negligible excess for the year 1965-1966. Even for the year 1966-1967 only much less than what was spent for 1962-1963 has been expended. We have not got before us the figures for 1967-1968 which will of course be complete only after the year is over.
40. But there is one factor which is not only puzzling but disturbing. The specific reason, if any, for spending progressively lesser amounts in later years when there has been progressive increase in the income has not been explained.
On the whole the picture that we get from the materials before us is not a satisfactory one. But we think it would be unwise to lump to the conclusion that the revenue derived from the collection of the taxes under the impugned Act is unnecessary for the development of facilities for improvement oi communications which in turn would result in augment-ing the trade, commerce or intercourse. It may be that much more than what is collected will be expended in coming years or has already been expended this year. The fact that there has been substantial iall in the expenditure during the years 1904-65 to 1966-67 may well be aue to the fact that there has been strain and stresses which necessitated the adoption of a policy to curtail expenditure for this purpose, so as to augment the resources for other inevitable and unavoidable expenditure which were urgently required in the public interest. Such things may, and necessarily often do, occur in the administration of the affairs of a State and result from policy decisions taken by the Government who are the best judges of the situation and who have to decide on the allocation of revenue,
41. In these circumstances we do notthink, that we would be justified in saying on the basis of the working for threeyears only that the tax imposed underthe impugned Act has saddled as unreasonable restriction and such restriction isnot in the public interest. We do notthink that it can be disputed and wethink it is common place knowledge, thatroadways in this State, and for thatmatter, in the whole of India, have tomake great strides in order to keep upwith the facilities available in this regard in other countries. It is also conceivable that large amounts will have tobe expended, perhaps much greater thanthe revenue received under the impugned Act and the Kerala Motor VehiclesTaxation Act, for this purpose now, andin the immediate future, and may be it.will be so expended by the State. Weare unable therefore to say at this stagethat the restriction imposed by the taxis not reasonable and is against publicinterest. We therefore dismiss these writapplications but subject to the directionthat we have issued in paragraph 30 ofour judgment. There will be no order asto costs in these petitions.