MEENAKSHI ALIAS RAMA BAI Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) NEXT only to liquor licencees but almost comparable with them are the transport operators who have flooded this Court complaining of some imaginary or untenable grievances, the sole purpose being to snatch some interim relief under one or the other pretext.

(2.) PETITIONERS and appellants in this group of appeals and special leave petitions are either operators of omnibuses, mini buses or stage carriages in the State of Karnataka. They have a grievance against the enhancement of tax on their vehicles levied under the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1979 ('Taxation Amendment Act' for short). They filed writ petitions in the High Court of Karnataka challenging the Taxation Amendment Act on diverse grounds but the central point of attack was that the collection of the tax since prior to its impugned enhancement was sufficient to meet the construction and maintenance of roads and bridges in the State and hence the tax imposed at the enhanced rate under the Taxation Amendment Act, 1979 is violative of freedom of trade, commerce and intercourse guaranteed by Article 301 of the Constitution and the enhanced tax is not shown to be compensatory in character and hence not saved. The second contention was that the impugned Taxation Amendment Act was brought into force with effect from March 31, 1979, yet the petitioners were made liable to pay tax from 1/03/1979 and this limited retrospectivity given to the impugned legislation is impermissible and must be struck down.

(3.) ARTICLE 301 guarantees freedom of trade, commerce and intercourse throughout the territory of India. This is subject to the other provisions of Part XIII of the Constitution. Petitioners contend that levy of tax on transport vehicle use for carriage of passengers at an usually high rate interferes with the freedom of trade, commerce and intercourse throughout the territory of India. Whether levy of a tax computed according to sitting capacity of a transport vehicle used for carriage of passengers by itself without anything more restricts or thwarts freedom of trade, commerce and intercourse throughout the territory of India guaranteed by Art. 301 is no more res integra? It was in fact conceded that revenue collected by such tax if employed for purposes which would not only not restrict or impede but facilitate smooth and unhampered trade, commerce and intercourse throughout the territory of India, such tax would not be violative of Art. 301 of the Constitution. Thus regulatory measures or measurers imposing compensatory taxes for the use of trading facility are outside the purview of ARTICLE 301 of the Constitution. This in fact was not disputed and could not be disputed in view of the decisions of this Court in Atiabari Tea Co. Ltd. v. State of Assam. (1961) 1 SCR 869 : (AIR 1961 SC 232), M/s. Sainik Motors, Jodhpur v. State of Rajasthan, (1962) 1 SCR 517 : (AIR 1961 SC 1480). The Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, (1963) 1 SCR 491 : (AIR 1962,SC 1406) and Malwa Bus Service (Pvt.) Ltd. v. State of Punjab AIR 1993 SC 634. Expanding the concept of what are called compensatory taxes as to be outside the purview of Art. 301, it can be said that the augmentation of revenue by such taxes which would be available for laying of new roads and maintenance of existing roads in proper shape and form, setting up of terminal facility for passengers, bus stands, other facility which make travel more comfortable and enjoyable, encourage and facilitate travel in its various elements, easy and unimpeded transport of goods by road transport world be comprehended within what are styled as compensatory taxes. Simultaneously, it is necessary to administer a caution that in order to justify the tax on goods and passengers vehicles as being compensatory, it is not necessary for the authority leving the tax that the entire revenue collected from the levy of tax is spent or is expendable only on construction and maintenance of roads and providing other facilities for making free Row of traffic smooth and enjoyable. If quid pro quo is to be established from the receipt of the tax and the expenses on maintenance and construction of roads, the tax would take the nature of a fee and this was expressly rejected by this Court in International Tourist Corporation v. State of Haryana, (1981) 2 SCR 364 : (AIR 1981 SC 774). This Court speaking through one of us (Chinnappa Reddy, J.) observed as under :