Sardar Karam Singh vs The State of Himachal Pradesh etc.

R.S. Pathak, C.J.—The Petitioner challenges the validity of a notification amending Rule 9 of the Himachal Pradesh Passenger and Goods Taxation Rules, 1957.

The facts set out in the writ petition are these:

The Petitioner is engaged in the business of goods transport. He holds a public carrier permit issued by the State Transport Commissioner, Punjab in respect of a goods truck operated by him. Before the re-organisation of Punjab in 1966, the permit extended to the hill roads of Kangra and Hoshiar-pur districts including Una-Nangal, Garhshan-ker-Nawanshar, Pathankot and Hoshiarpur. All this area originally fell within the erstwhile State of Punjab, and after the re-organisation of Punjab a portion of the area now lies in the State of Himachal Pradesh.

The State of Himachal Pradesh published a scheme u/s 68-D of the Motor Vehicles Act, 1939, under which the Himachal Pradesh transport undertaking, namely, the Himachal Pradesh Government Transport, would carry all goods on inter-State and intrastate routes through its own fleet of vehicles and a fleet of private operators attached with it. A private operator could have his vehicle attached on payment of Rs. 6,000.

In 1952, the State of Punjab imposed a tax known as Passengers and Goods tax on the fare and freight realised on the carriage of passengers and goods. Originally, the rate of tax was fixed at 1/12th of the fare and freight. By Section 4 of the Act public carriers were required to pay the tax in a lump sum in lieu of the tax chargeable, and pursuant to Rule 9 of the Punjab Passengers and Goods Taxation Rules, 1952, the Petitioner was paying Rs. 1,215/- per annum immediately before the re-organisation of Punjab. After the reorganisation, the Petitioner is now paying Rs. 200 per annum to the State of Punjab inasmuch as he is plying only partly in that State. Operators who ply in entire State of Punjab are liable to pay Rs. 810 per annum.

In the State of Himachal Pradesh, a similar enactment called the Himachal Pradesh Passengers and Goods Taxation Act, 1955, was brought into force. Section 4 of the Himachal Act empowered the State Government to accept a lump sum in lieu of tax chargeable on freight, and by Rule 9 of the Himachal Pradesh Passengers and Goods Taxation Rules, 1957, the amount of the lump sum was prescribed at Rs. 600 per annum.

Therefore a public carrier wishing to ply in the State of Himachal Pradesh had to pay Rs. 6,000 per annum for the grant of a public carrier permit and to enable it to be attached with the Himachal Government Transport, and also to pay Rs. 600 per annum as a lump sum in lieu of the tax chargeable under the Himachal Pradesh Passengers and Goods Taxation Act.

The aforesaid scheme u/s 68-D of the Motor Vehicles Act has been withdrawn by the Himachal Pradesh Government and permits are now issued to private operators under Chapter IV of the Motor Vehicles Act. The payment of Rs. 6,000 formerly necessary when the public carrier was attached to the Himachal Government Transport is no longer required. By notification No. 8-4/72-E&T(Sectt)., dated June 22, 1972, the Governor of Himachal Pradesh amended the Himachal Pradesh Passengers and Goods Taxation Rules, 1957, in so for that the existing second proviso to Rule 9 was substituted by a proviso which reads:

Provided that the owner of a public or a private carrier shall pay to the Government a sum of Rs. Rs. 2,500 (Rupees two thousand and five hundred) per annum in lump sum in lieu of the tax chargeable on freight with effect from July 1, 1972. The lump sum tax shall be payable in equal quarterly instalments and shall be paid within fifteen days of the commencement of the quarter concerned.

The Petitioner says that the amount was enhanced by the Government to Rs. 2,500 per annum in order to compensate for the loss occasioned by the removal of the liability to pay Rs. 6,000 under the Section 68-D scheme. The Petitioner also urges that while transport operators plying under a permit issued by the Himachal Pradesh Transport Authorities for the whole of Himachal Pradesh are required to pay Rs. 2,500 per annum, the Petitioner is obliged to pay the same amount notwithstanding that he is entitled to ply in part only of Himachal Pradesh.

The Petitioner challenges the constitutionality of the aforesaid notification, dated June 22, 1972, on the ground that an invidious discrimination has been made between him and transport operators plying throughout Himachal Pradesh, that the amount of freight is related to the distance travelled and therefore the Petitioner cannot be placed in the same class as operators plying throughout Himachal Pradesh. It is also contended that the impugned notification contravenes Articles 301 and 304 of the Constitution in as much as the prior sanction of the President of India was not taken before the amendment in the rules and because the Petitioner''s business is unreasonably hampered by the operation of the amended rule. It is also urged that the amended rule falls beyond he scope of the Act and is, therefore, ultra vires. The Petitioner prays for the quashing of the notification dated June 22, 1972.

From the return filed by the Respondents it appears that a lump sum rate of Rs. 2,500 per annum is now chargeable from all transport operators plying in Himachal Pradesh, whether in part of or the whole State. It is urged by the Respondents that payment of the lump sum is optional with the operators, and it is open to him to prefer to pay the actual tax chargeable u/s 3 of the Act. It is also stated that in case the Petitioner has been directed to pay the lump sum amount of Rs. 2,500 by way of a compulsory levy, the Assistant Excise and Taxation Officer, Una, has been directed by the Excise and Taxation Commissioner, Himachal Pradesh by his office memorandum No. 14-66/68-E&T., dated January 17, 1972, to withdraw such direction and to issue a fresh notice requiring the Petitioner to pay either Rs. 2,500/-as a lump-sum or to pay on the basis of actual freight. It is asserted that under the first proviso to Section 4 of the Act, the State Government is entitled to charge the lump sum at a flat rate of Rs. 2,500 per annum irrespective of whether the operator plies in a part only or in the whole of Himachal Pradesh.

The relevant provisions of the Himachal Pradesh Passengers and Goods Taxation Act, 1955, may be set out. Section 3(1) provides:

(1) There shall be levied, charged and paid to the State Government a tax on all fares and freights in respect of all passengers carried and goods transported by motor vehicles at the rate of one-twelfth of the value of the fare or freight, as the case may be, subject to a minimum of two paise in any one case, the amount of tax being calculated to the nearest paise....

(2) ....

(3) Where passengers are carried or goods transported by a motor vehicle from any place outside the State or from any place outside the State to any place outside the State but through the State or from any place within the State to any other place within the State but through the intervening territory of another State to any place within the State, or from any place within the State to any place outside the State, the tax shall be payable in respect of the distance covered within the State at the rate laid down in sub-section (1) and shall be calculated on such amount as bears the same proportion to the total fare and freight as the distance covered in the State bears to the total distance of the journey.

Section 4 provides:

The tax shall be calculated by the owner of the motor vehicle and paid to the State Government in the prescribed manner:

Provided that in case of public carriers or private carriers the Government may accept lump sum in lieu of tax chargeable on freight in the manner prescribed....

It is clear from the charging provision in Section 3(1) of the Act that the tax is levied on fares and freights in respect of passengers and goods carried by a motor vehicle. The rate prescribed is a specified fraction of the value of the fare or freight. Apparently, therefore, the quantum of the tax will vary according to the amount of the fare or freight. Commonly, the fare or freight varies with the distance over which the passengers or goods are carried. The principle is clearly expressed in Section 3(3) which deals with the case of passengers and goods carried on a journey which falls partly in Himachal Pradesh and partly outside it. Section 3(3) provides that in such a case the tax shall be payable in respect of the distance covered within Himachal Pradesh, the tax being computed on the amount of fare or freight which is proportionate to the distance covered in Himachal Pradesh. Section 4 by its first proviso permits the government in the case of public carriers or private carriers to accept a lump sum in lieu of tax chargeable u/s 3. The government is thus empowered to accept a lump sum in respect of the tax. The proviso uses the words "may accept". They indicate (a) an offer by the owner of the motor vehicle to pay a lump sum in lieu of tax and (b) a power in the government to accept the offer. The making of such an offer is left to the will of the motor vehicle owner, and so also it is open to the government to decide whether it should accept the offer. The government has now bound itself by rules framed under the Act to accept an offer made by a motor vehicle owner if that offer is made in accordance with rules. Rule 9 of the Himachal Pradesh Passengers and Goods Rules, 1957, provides:

Method of payment of tax.--Tax shall be paid in one of the following manners:

(i) By stamping the ticket or receipt.... Provided that a public carrier shall pay to the State Government the following lump sum in lieu of the tax chargeable on freights:

(a)....

(b) Five hundred and forty rupees per annum per vehicle plying on hill routes or under counter-signatures of the authorities of the adjoining States under the Motor Vehicles Act, 1939.

It appears that the amount mentioned in Rule 9(b) was altered from time to time. By the impugned amendment introduced by the notification dated June 22, 1972, the owner of a public or private carrier is liable to pay to the government the sum of Rs. 2,500 per annum by way of a lump sum in lieu of the tax with effect from July 1, 1972. Nowhere does Rule 9 make any distinction between the lump sum payable by a motor vehicle owner operating in part only of Himachal Pradesh and a motor vehicle owner operating in the whole of Himachal Pradesh. The amount of the lump sum payable is the same for all.

It has been contended on behalf of the Petitioner that payment of the lump sum is obligatory and that therefore the rule exceeds what is contemplated by Section 4 of the Act and is, therefore, ultra vires. In my opinion, in the context of Section 4 there is no ground for the conclusion. I have already explained that Section 4 gives an option to the motor vehicle owner to offer a lump sum in lieu of tax chargeable u/s 3. The option rests with him. It is for him to decide whether he wishes to pay the tax calculated on the actual freight in accordance with Section 3 or prefers to pay a lump sum in lieu of the tax. If he chooses to pay a lump sum, the government is bound to accept it provided the payment is made in accordance with the rules. No question arises of the motor vehicle owner being bound to pay a lump sum in lieu of tax. It appears that there was some doubt in the matter, but that doubt has been cleared by the Excise and Taxation Commissioner, Himachal Pradesh, by his office memorandum No. 14-66/58 E&T, dated January 17, 1972.

The next question is whether the governnment, when prescribing a lump sum, has violated Article 14 of the Constitution by imposing the same amount by way of a lump sum on all motor vehicle owners, whether they operate in part only or in the whole of Himachal Pradesh. There can be little doubt that the determination of the lump sum must be left to the government. Although the proviso to Section 4 speaks of it as a "lump sum in lieu of the tax", there can be no dispute that payment of the lump sum is payment of a tax. In its essential nature, it is a tax levied by the Act. When the proviso to Section 4 speaks of it as "a lump in lieu of the tax" it declares that instead of paying the tax calculated on the basis of actual freight according to the provisions of Section 3(1) what can be paid is a lump sum by way of tax. It is well settled that the rate at which tax may be levied is a matter resting with the legislature, or, if the Act so provides, with the government. Nonetheless, the levy of the tax must conform to Article 14 of the Constitution. It is not open to the legislature or the government to create an invidious discrimination between persons and persons by prescribing different rates of tax in respect of persons similarly situated or the same rate of tax in the case of persons not similarly situated.

I do not think that it can be disputed that a tax on fares and freights should be related to the distance over which the passengers and goods are carried. The principle is implicit in the nature of the tax and in the quantification of its measure on the basis laid down in Section 3(1). It is explicit in the provisions of Section 3(3) which provides for a tax on the proportionate fare and freight calculated on the basis of the distance covered within Himachal Pradesh. Inasmuch as the lump contemplated by the proviso to Section 4 is of the same nature as the tax contemplated by Section 3, that is to say it is "passengers and goods tax", the conclusion is inescapable that the principle for quantifying the lump sum must proceed on the same basis. The lump sum, in other words, should be so graded that it is related to the distance travelled by the goods. It is a lump sum only in so far as it is fixed without reference to the actual volume of goods carried by the motor vehicles from day to day. Accordingly, if the motor vehicle can ply in part only of Himachal Pradesh, it should not be made liable to pay a lump sum which is the same as that payable by a motor vehicle operating throughout Himachal Pradesh. To the extent that the second proviso to Rule 9 makes no provision for such distinction, it violates Article 14 of the Constitution.

Accordingly, I hold that proviso (b) to Rule 9 is ultra vires in so far as it imposes the same amount of tax by way of a lump sum on the Petitioner as in the case of motor vehicle owners operating throughout Himachal Pradesh. The requirement that the Petitioner must pay a sum of Rs. 2,500 per annum on account of tax as a lump sum cannot be sustained.

The Petitioner has also contended that the impugned imposition contravenes Articles 301 and 304 of the Constitution. It is not necessary to examine that contention in view of the finding that the imposition is otherwise invalid.

It is urged for the Respondents that it is open to the Petitioner not to opt in favour of the payment of the tax as a lump sum but to prefer payment of the tax on the basis of the actual freight. It is stressed that the motor vehicle owner is under no obligation to pay the tax as a lump sum u/s 4, and he is perfectly entitled to pay the tax in accordance with Section 3. It is said that if, the motor vehicle owner insists on op Ling in favour of paying the tax as a lump sum, he has only himself to blame. The contention is without substance. The government was empowered by the proviso to Section 4 of the Act to provide a scheme for payment of tax as a lump sum. The government exercised that power and enacted rules providing for such a scheme. The scheme so provided must be meaningful and consistent with the constitutional and statutory law. So long as there is a scheme, it must operate in accordance with the law. If any provision of the scheme is inconsistent with the law it is open to a motor vehicle owner who is affected there by to complain of it. The Respondents rely on S. Rajinder Pal Singh and Others Vs. Union of India (UOI) and Another, and Suraj Goods Carriers Private Limited v. The State of Punjab ILR XIX P&H 26, but a perusal of those cases shows that they are of no assistance to the Respondents.

In my judgment, the Petitioner is entitled to relief. Before us the Petitioner has merely agitated against the validity of the notification dated June 22, 1972, imposing a sum of Rs. 2,500 per annum as tax payable in a lump sum. He has not challenged the second proviso to Rule 9 as it stood before the impugned amendment. In the circumstances, the relief granted to him should be confined to the operation of the impugned amendment.

The writ petition is allowed. The Respondents are restrained from giving effect to the amended second proviso to Rule 9 of the Himachal Pradesh Passengers and Goods Taxation Rules, 1957, in so far as it affects the Petitioner. The Petitioner is entitled to his costs, which I assess at Rs. 200.

C.R. Thakur J.

I agree.