K. Veeraswami, C.J.
1. These are two sets of petitions for quashing two notifications of the State Government G.O. Ms. No. 923, Home, dated 19th April, 1969 and G.O. Ms. No. 434, Home, dated 27th February, 1970. They were issued in exercise of the powers conferred by subsection (1) of Section 17 of the Tamil Nadu Motor Vehicles Taxation Act, 1931, as amended. By these notifications, rules were made amending Schedules II and III to the Act and the amendments have been approved by the Legislative Assembly as required by Sub-section (3) of Section 17 of the Act. The first of the notifications increased the rate of tax in respect of contract carriages, from Rs. 30 to Rs. 50 per passenger seat per quarter, and the second from Rs. 50 to Rs. 100. The petitioners are individual omnibus operators in some of them and the Salem-Dharmapuri Omnibus Operators Association is one of the petitioners. They assail the validity of the notifications on the main ground that they constitute an improper exercise of the taxing power under the Act, inasmuch as they have been expressly made for the purpose of regulation of the contract carriages. Another ground is that, they are arbitrary and even confiscatory. The main ground seems to us to be well-founded.
2. In one of these petitions the facts are these, which, for present purposes, are typical of those in the other petitions. The petitioner owns an omnibus MDU 7897 registered as a contract carriage. It has a capacity to accommodate 49 passengers with all the seats facing forward. He had been in the employ of a fleet operator as a driver and tourist organiser, but he resigned his job and entered into the field of transport business from 1968 on his own. He says that he pooled his small savings and purchased the omnibus on hire-purchase agreement, and held the permit No. 26/28. At that time the tax payable was Rs. 30 per seat per quarter. According to him, the system of issuing permits for omnibuses to ply as contract carriages was first introduced in the year 1963, that although at the start permits were issued only by the State Transport Authority which were valid throughout the State, subsequently on account of the phenominal increase in the demand for contract carriages for the conveyance of tourists, pilgrims, marriage parties, etc., operators found it very difficult to cope with the demands even with the considerable number of existing spare buses and as a result, the policy of issuing permits for contract carriages was liberalised, and that the Regional Transport Authorities concerned were authorised to issue permits which would be valid for any region with State-wide validity. It is his case that these contract carriages were of somewhat luxurious kind, involving considerable investment, that originally the tax was levied on contract carriages at the rate of Rs. 10 per seat per quarter, but when the system of permitting contract carriages to ply as omnibuses by the Regional Transport Authorities or, as luxury coaches, by the State Transport Authority was introduced, the rate of tax was raised to Rs. 30 per seat per quarter from 1963. There was further increase of the rate Rs. 50 with effect from 1st July, 1969 and ever since, says the petitioner, he had been incurring loss. In support of these averments, he has filed a statement of accounts giving details of a net loss of Rs. 4,933-40 for the period from 1st January, 1969 to 31st December, 1969. We were also told that the rates of charges for passengers by the contract carriages worked out roughly to 2 paise per mile per passenger, whereas in stage carriages the rate was 4 paise per passenger in ordinary buses, and 5 paise in the case of express buses, and further the contract carriages had to face operational difficulties such as they had to ply on newly formed routes and tracks which accounted for a large wear and tear. Apart from this, there is a large investment by way of capital expenditure on contract carriages. The conditions and terms on which these contract carriages would run were different from those of the stage carriages. Nevertheless, with effect from 1st April, 1970, the rate of tax has been further increased to Rs. 100 per seat per quarter, for contract carriages, which the petitioner says is unreasonable, expropriatory and has been introduced for extraneous and unjustifiable reasons. The petitioner would say therefore that this was a case of an arbitrary and colourable exercise of power.
3. On the view we take, it is not necessary to examine whether the increase of the rate from Rs. 30 to Rs. 50 and then to Rs. 100 is expropriatory and/or unreasonable. If the rate has been increased from time to time only with the intention of augmenting the revenues, it would have been difficult for the petitioner to find fault with the notifications, which the State Government has undoubtedly power to issue. But the petitioner's submission is that the taxing power under the Act has been used for extraneous purpose and the notifications should, therefore, be struck down.
4. The Tamil Nadu Motor Vehicles Taxation Act was passed in order to abolish within the State the levy of all the then existing tolls and taxes on motor vehicles by local bodies, and provide for the levy of a Provincial tax on motor vehicles. Section 4 (1), which is the charging section, empowers the State Government to direct by notification, that the tax shall be levied on every motor vehicle using any public road in the State. The notification shall specify the rates at which and the quarter from which the tax shall be levied, provided such rate shall not exceed the maximum specified in the second schedule to the Act. At the same time, the State Government has been entrusted by Section 17 (1) with the power to make rules amending the schedule. It is in exercise of this power that the impugned notifications were issued, amending by rules the second schedule, by raising the rates as we have earlier mentioned. That schedule for purposes of specifying the maximum rates classifies motor vehicles and mentions the maximum quarterly tax payable by each class according to whether the relative vehicles are fitted with pneumatic tyres or not. In classifying vehicles, goods vehicles, motor vehicles plying for hire and used for the transport of passengers, and other vehicles are treated separately for fixing the rates, and in so doing their laden weight or the seating capacity, as the case may be, is taken into account. The Act contains other provisions complementary to administering levy, recovery and imposition of penalties. Section 10 directs how the proceeds of the tax collected under the Act should be utilised. After deducting administrative expenses, the balance is distributed in the manner indicated by the section, to the Government and local bodies. The provisions of this section read with the second schedule as well as the other provisions of the Act, do indicate that the tax is a kind of compensatory tax. That view of the nature of tax was taken by one of us in Ayodhya Naidu v. State of Madras : AIR1965Mad349 . In raising the tax and fixing the rate at which it should be raised, regard should naturally be had to facts and circumstances relevant thereto, in the context and intendment of the provisions of the Act, and the nature of the tax, and it will not be for the Courts to enquire into the wisdom of raising it or fixing its quantum. The State Legislature has made the Act evidently in exercise of its power under Entry 57 and possibly of Entry 56 of List II of the Seventh Schedule to the Constitution, viz., 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 taxes on goods and passengers carried by road or inland waterways. In exercise of the power under Entry 57 of List II, the State Legislature is entitled to levy the tax on vehicles, and so long as the power is used for the purpose of raising such tax, its validity cannot be questioned on the ground of its consequences. In this regard we accept the contention for the State. In McCray v. United States 49 L.Ed. 78, the validity of an Act levying tax on artificially coloured oleomargarine was questioned on the ground that a power granted as a means of raising revenue could not lawfully be diverted by the indirect use of it to do what the Congress had no power to do by direction, and that the end was not therefore legitimate. Repelling this contention, the Supreme Court of the United States said:
Undoubtedly, in determining whether a particular Act is within a granted power, its scope and effect is to be considered. Applying this rule to the Acts assailed, it is self-evident that on their face they levy an excise tax. That being their necessary scope and operation, it follows that the Acts are within the grant of power. The argument to the contrary rests on the proposition that, although the tax be within the power, as enforcing it will destroy or restrict the manufacture of artificially coloured olemargarine, therefore, the power to levy the tax did not obtain. This, however, is but to say that the question of power depends not upon the authority conferred by the Constitution but upon what may be the consequence arising from the exercise of the lawful authority.
5. United States v. Doremus 63 L.Ed. 493, is to the same effect. There can also be no doubt as to the tenability of the proposition that the intention of a given piece of legislation should be ascertained solely from the language used in the statute. In R.M.D.C. (Mysore) Private Ltd. v. State of Mysore : 3SCR230 , the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, was attacked on the ground that a tax must be levied for the purpose of revenue and could not be for the purpose of control and that the Act was really colourable legislation in that the impugned tax had been levied for the purpose of controlling prize competitions although it was given the form of a tax. The Supreme Court declined to accept the ground and observed:
It may be remarked that the Court, in construing and interpreting the Constitution or provisions of an enactment, has to ascertain the meaning and intention of Parliament from the language used in the statute itself and it is not concerned with the motives of Parliament.
6. Before us, it is not the validity of the Act that has been questioned. We are not asked in this case to read from the provisions of the Act any intention to deviate from the purpose of levying tax on motor vehicles, in order to achieve a result totally irrelevant to the Act for the purposes of levying such tax.
7. But what is contended is that the power of the State Government under Section 17(1) is confined only to the raising of revenue, but the impugned notifications themselves make it clear that the schedule has been amended and the rates have been raised 'with a view to avoid unhealthy competition between omnibuses and regular stage carriages and to put down the misuse of omnibuses'. This contention is clearly borne out and is valid. The preamble to G.O. Ms. No. 434, Home, dated 27th February, 1970, itself proves this. It says:
In G.O. Ms. No. 1579, Home, dated 24th June, 1969, the rate of tax for omnibus was increased from Rs. 30 per seat per quarter to Rs. 50 per seat per quarter from 1st July, 1969. With a view to avoid unhealthy competition between omnibuses and regular stage carriages and to put down the misuse of omnibuses, the Government have decided to increase the tax for the omnibuses to Rs. 100 per seat per quarter.
8. Our attention has also been invited to Government Publications purporting to be Review of Road Transport in Tamil Nadu for 1968-69 and 1969-70. In the first of them, this is what is stated:
Omnibuses: It has been brought to the notice of the Government that omnibuses are posing a problem to regular stage carriages by picking up passengers near bus stands. The fourfold increase in the number of omnibuses within one year is significant. With a view to remove this unhealthy competition, it is proposed to raise the rate of motor vehicles tax in respect of omnibuses to be on a par with that of regular stage carriages.
9. The second publication also contains a similar statement:
Omnibuses: With a view to avoiding unhealthy competition between omnibuses and regular stage carriages and put down the misuse of omnibuses it is proposed to increase the rate of motor vehicles tax in respect of omnibuses from the existing Rs. 50 per seat per quarter to Rs. 100 per seat per quarter.
10. In fact, the counter-affidavit filed on behalf of the State does not deny that it is so. It states:
The increase in the rate of tax is certainly to augment the resources of the State and it is not solely to avoid unhealthy competition between omnibuses and stage carriages as contended by the petitioner. The presumption of the petitioner that the increase in rates is solely to prevent to misuse of omnibuses is not correct. As stated already, the increase in rate of tax is based on other considerations as well.
11. Obviously, we cannot possibly accept this approach to the question because the notification under Section 17 (1) does not leave any room for doubt as to the purpose for which it was made, which is not raising revenue, but for the extraneous purpose specifically mentioned. When the tax is levied at the increased rate, factually it is raising of revenue. But where power is delegated to the State Government as under Section 17 (1) to amend the second schedule by making suitable rules, the power is meant to be exercised only for the purpose of raising the tax. If the notification had not stated the purpose for which it was made, the Court will not go into the motive of it or allow any presumption to be drawn as to its extraneous purpose. But here the notifications, as well as the reviews we mentioned, have placed the extraneous purpose beyond doubt for which the notification is made. To make such notifications for extraneous purpose of controlling and regulating motor vehicles is clearly in excess of the delegation under Section 17 (1). To such a case, we think, the principle of Express Newspapers (P.) Ltd. v. Union of India : (1961)ILLJ339SC , would be clearly apply. In that case, the provisions of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, was declared invalid on the ground:
The tax here involved is bad.... Because, the light of its history and of its present setting it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guarantees.
12. This principle is also discernible from the following observation in paragraph 166 of II Halsbury's Laws of England, 2nd Edition:
The Constitution, though in some respect influenced by the United States Constitution, is not to be interpreted otherwise than as an Act of the British Parliament. Thus there is no prohibition of the taxation of federal salaries by the provinces, or of provincial salaries by the federation. The possibility of misuse of federal or provincial power to destroy the instrumentalities of the other is not denied, but is met by the doctrine that the legislation of this kind would not be really taxation but an effort to exceed the sphere allocated by the Constitution.
13. We are clear, therefore, that the impugned notifications are but a device, that is to say, regulating and controlling contract carriages against their misuse as mentioned in the notifications under the guise of raising tax on motor vehicles.
14. Such an exercise of power under Section 17 (1) of the Act is not warranted by its provisions, and is illegal. Control and regulations of motor vehicles is not a taxing power under Entry 57 of List II, but a different power within the purview of Entry 35 of List III to the Seventh Schedule of the Constitution. The Motor Vehicles Act contains elaborate powers of control and regulation in order to prevent the abuse, if any, mentioned in the impugned provisions.
15. We hold, therefore, that the impugned notifications are illegal and invalid. The petitions are allowed with costs. Counsel's fee Rs. 100 in each.