Punjab-Haryana High Court
Hyderabad Industries Limited And Anr. vs State Of Haryana And Anr. on 22 November, 2002
JUDGMENT G.S. Singhvi, J.
1. The petitioners have challenged the constitutionality of Punjab Passengers and Goods Taxation (Haryana Amendment and Validation) Act No. 2 of 1988 (for short, 'the Validation Act') and have also prayed for quashing the challan issued by the Excise and Taxation Officer (Enforcement)-cum-Assessing Authority, Faridabad for levy and recovery of tax under the Punjab Passengers and Goods Taxation Act, 1952, as applicable to the State of Haryana (for short, 'the Act1) in respect of the vehicle bearing registration number HRP-2150.
2. The petitioners have mainly relied on the judgment of the Supreme Court in Tata Engineering and Locomotive Co. Ltd. v. Sales Tax Officer and Regional Transport Officer, Poona and Anr., A.I.R. 1979 S.C. 343 and claimed that the respondents cannot levy and recover tax from them because the vehicle in question is being used for transportation of employees from their residences to the factory premises and not for hire and reward. They have pleaded that the Validation Act is ultra vires to the powers of the State Legislature and is also violative of Articles 14, 19(1)(f) and (g) and 300A of the Constitution of India. They have further pleaded that retrospective levy of passengers tax should be declared arbitrary, unreasonable and unjustified because they had not charged fare from their employees on the premise that no tax is leviable on the vehicle used for their transportation from residences to the factory premises and back.
3. The respondents have defended the impugned legislation and recovery of passenger tax from the petitioners by asserting that State Legislature had the competence to enact law to validate the levy of passenger tax which was nullified by virtue of judgment of the Supreme Court in Civil Appeal Nos. 2005-2012 of 1977 - Bharat Steel Tubes Limited v. State of Haryana and Ors. They have placed reliance on order dated 28th August, 1989 passed in Civil Writ Petition No. 10938 of 1989 - Haryana Steel and Alloy Limited v. State of Haryana and Ors., upholding the constitutionality of the Validation act and have averred that in view of the decision of the Division Bench, the impugned legislation cannot be struck down on the ground of lack of legislative competence in the State or violation of Articles 14, 19 and 300A of the Constitution of India.
4. Shri P.S. Patwalia argued that the validation act may be declared unconstitutional because it seeks to validate the levy of tax which was declared illegal by the Supreme Court without removing the defect/infirmity found by the Apex Court in the existing legislation. He also relied on the judgment of the Supreme Court in Tata Engineering and Locomotive Co. Limited v. Sales Tax Officer and Regional Transport Officer, Poona and another (supra) and argued that notwithstanding the enactment of the validation Act, the action initiated by the respondents for levy of tax on the petitioners should be declared illegal because the vehicle owned by them is not used for carriage of passengers for hire or reward.
5. Shri Jaswant Singh relied on the decision of M/s Haryana Steel and Alloys Limited case (supra) and argued that in view of the unequivocal pronouncement of the Division Bench, the impugned legislation cannot be declared unconstitutional. He pointed out that Civil Appeal No. 3029 of 1990 arising out of S.L.P. (Civil) No. 20067-20069 of 1996 filed against the order of the Division Bench was dismissed by the Supreme Court on 14th October, 1997, He has produced a photostat copy of the order passed by the Supreme Court. He has also relied on an order dated 24th April, 1997 passed by a Single Bench in C.W.P. No. 4002 of 1982 - The Associated Cement Co. Limited, Bhupendra Cement Works, Swajpur v. State of Haryana and Ors., and submitted that the petitioners ' challenge to the competence of the State Legislature to enact the impugned legislation and levy of passenger tax on the vehicle operated by the petitioners for carriage of employees from their residences to the factory premises and back should be negatived.
6. I have given serious thought to the respective arguments.
7. The question as to whether the Validation Act suffers from any constitutional infirmity was considered in M/s Haryana Steel and Alloy Limited's case (supra) and answered In the negative. In that case, the Division Bench noticed the arguments advanced on behalf of the petitioner for challenging the constitutionality of the Validation Act and rejected the same. The relevant portions of that order are reproduced below:-
"We have carefully considered the submissions of Shri Kapoor, but do not find any merit therein. Haryana Amendment Act No. 2 of 1988 which has incorporated the impugned provisions in the Act, has substituted Clause (f) defining 'passenger' and Clause (1) defining 'motor vehicle' for the previous provisions. The definitions of 'passenger' and 'motor vehicle' have been substantially changed. Previously 'passenger' meant a person travelling in a public service vehicle but by the amendment, passenger has been defined to mean a person travelling in a motor vehicle other than a private and public carrier. Whereas previously only a person travelling by a public service vehicle could be termed to be a passenger within the contemplation of the Act. Now any person travelling in a motor vehicle other than a private and public carrier means a passenger. Similarly, the expression "motor vehicle" has been given new meaning. It includes, inter alia, public carrier, private carrier and omnibus used by an employer other than the Government for carriage of his employees. Unamended Section 3, which was the charging section, provided that there shall be levied, charged and paid to the State Government, a tax at such rate not exceeding 650 per centum of the value of fare or freight, as the case may be on all passengers and goods carried by a motor vehicle other than a private carrier. This provision and explanation thereto have been recast and a new explanation has been added, which provides that when passengers and goods are carried by a motor vehicle other than a private carrier, and no fare or freight is charged or only token or concessional fare or freight is charged, the tax shall be levied and paid as if such passengers and goods are carried at the normal rate prevalent on the route. The provisions incorporated in principal act by Haryana Act No. 2 of 1988 do not in any manner run counter to the preamble of the Act. The preamble reads as under:-
"An Act to provide for levying a tax on passengers and goods carried by road in certain motor vehicles."
Even now, the tax is leviable on passengers and goods carried by road in certain vehicles, the only change is in the definition of 'passenger'. Previously persons travelling by public service vehicles only could be termed as passengers and were liable to pay tax; but now persons travelling by motor vehicles as defined in Clause (i) of Section 2 attract the liability of payment of tax. The expression 'passenger' now comprehends persons travelling in motor vehicles other than private and public carriers and motor vehicles means and includes an omnibus used by a private employer for the carriage of his employees. It is immaterial whether fare is charged from them or not. Under the Act, the tax is charged at a rate not exceeding 60 percent of the value of fare or freight, as the case may be, on all passengers and goods carried by a motor vehicle other than a private carrier. The tax is charged on passengers and not on the fare. The fare is taken into account for quantifying the tax. The explanation to section prescribes the mode of determining the rate of tax in those cases when fare or freight is charged. In view of the clear language of the amended provisions, it is futile to argue that since the petitioner does not charge any fare from its employees, it is not liable to pay the tax under the Act.
We are not impressed with the second submission of Shri Kapoor, either. It is true that in Clause (i) of Section 2, the omnibus used by the Government for carriage of its employees have been excluded from the definition of 'motor vehicle' thereby absolving the Government from payment of taxes. However, this does not in any way violate the principles of equity before law enshrined in Article 14 of the Constitution. It is well settled mat the guarantee of equal protection of laws does not require mat the same law should be made applicable to all persons. Article 14 does not forbid classification for legislation purposes, provided that such classification is based on some difference in having a reasonable relation to the object and purpose of the law in question. Further there is a strong presumption in favour of validity of a legislative classification and it is for those who challenge it as unconstitutional to allege and prove beyond all doubt that the legislation discriminates between different persons similarly circumstanced (See KM Syed Mohammad & Co. and Anr. v. State of Andhra Pradesh, A.I.R. 1954 S.C. 314). It is also well recognised that though taxation law must also pass the test of Article 14, yet in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax and the statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection the law operates unequally and that cannot be justified on the basis of any valid classification that it will be violative of Article 14. In the application of these principles the Courts in view of inherent complexity and fiscal adjustment of diverse elements, permit a larger discretion to the legislature in the matter of classification, so long as it adherers to the fundamental principles underlying the said doctrine of equity. The power of legislature to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways. (Vide Anat Mills Limited etc. etc. v. The Municipal Corporation of the City of Ahmedabad and Ors., A.I.R. 1975 S.C. 1234).
Bearing in mind these principles, we-address ourselves to the impugned provisions contained in Section 2(i). It, indeed, excludes the omnibus used by the Government for carriage of its employees, whereas the vehicles used by the private employers for carriage of their employees are included in the definition of 'motor vehicle' as contemplated under the Act. However, there is a valid classification. Government and private employers fall in distinct and separate categories. The object behind the enactment of the act is to collect tax to augment revenues of the State. If vehicles owned by the State and used by it for the carriage of its employees are also deemed to be motor vehicles within the meaning of Clause (i) of Section 2 and the State Government is made to pay the tax out of its revenues, it will not in any manner advance the purpose of the Act. The moneys collected by the Government by way of taxes is used for the welfare of the public and benefit of the community in general. The Government has been treated as a class in itself in a number of statutes and in various decisions of the final Court."
8. The appeal filed by M/s Haryana Steel and Alloy Limited was dismissed by the Supreme Court. Their Lordships approved the view taken by the Division Bench and observed as under:-
"From a perusal of the definition of the expression "passenger" contained in Clause (f) of Section 2 as amended, it would be evident that every person travelling in a motor vehicle other than a private and public carrier is a passenger for the purposes of the Act and only driver or conductor or an employee of the owner of such vehicle travelling in the bona fide discharge of his duties in connection with the vehicle has been excluded and is not to be treated a passenger which means that all other employees of the owner of the motor vehicle travelling in the vehicle would be passengers for the purpose of Section 2(f) of the Act. The definition of the expression "motor vehicle" in Clause (1) of Section 2, as amended, has been widened and apart from a public service vehicle, it includes public carrier, private carrier or a trailer when attached to any such vehicle and omnibus used by an employer other than the Government, for carriage of its employees. In other words, an omnibus used by the Government for carriage of its employees has been excluded from the ambit of the said definition. A combined reading of the clauses (f) and (I) of Section 2 after amendment by Act No. 2 of 1988 would show that since an omnibus used by an employer for carriage of his employees is a motor vehicle, an employee of the owner of such vehicle travelling in any motor vehicle, who is not travelling in the bona fide discharge of his duties in connection with the vehicle, is to be treated as a passenger and tax will be payable by such passenger under Section 3 of the Act.
Shri Satish Chandra, the learned senior counsel appearing for the appellant in Civil Appeal No. 3029 of 1990, has submitted that the expression "public service vehicle" in the definition of "motor vehicle" contained in Section 2(1), as amended, controls the words which follow the said expression and, therefore, the words "omnibus used by employer other than the Government, for carriage of its employees" must be construed to mean an omnibus which is in the nature of a public service vehicle. We find it difficult to place such a construction on Clause (1) of Section 2. The definition of "motor vehicle" as contained in Section 2(1) can be split into three parts. In the first part the expression "motor vehicle" has been defined to mean a public service vehicle. In the second part, which is the inclusive part, the definition has been expanded so to include a public carrier, private carrier or trailer attached to any such vehicle and omnibus used by an employer for carriage of its employees. In the third part, which is exclusive part, an omnibus used by the Government for carriage of its employees has been excluded. Clause (i) of Section 2 is thus an inclusive as well as an exclusive clause. The inclusive part of the definition has to be read independently of the first part and it cannot be limited by the expression "public service vehicle" in the first part of the definition. The object of the inclusive part of the definition is to include vehicles other than the public service vehicles. By limiting the inclusive part by the expression "public service vehicle" the object underlying the insertion of the inclusive part in the definition would be defeated since there was no purpose in giving the inclusive part in the definition if the vehicle mentioned in the inclusive part has to be in the nature of a public service vehicle. It must, therefore, be held that the words "omnibus used by an employer other than the Government, for carriage of his employees" in Section 2(1) of the Act do not mean that such omnibus must be a public service vehicle.
The expression "omnibus" has been defined in Section 2(18-A) of the Motor Vehicles Act, 1939 and Section 2(20) of the Motor vehicles Act, 1988 to mean "any motor vehicle constructed or adapted to carry more than six persons excluding the driver." The vehicle used by the appellants and the petitioners in these cases for carrying their employees would be an "omnibus" and hence a motor vehicle under Section 2(1) of the Act. In these circumstances, in view of the amended definition of "passenger" and "motor vehicle" in clauses (f) and (1) of Section 2 of the Act, it must be held that tax is leviable under Section 3 of the Act on the owner of the vehicle in respect of the use of the motor vehicle for carrying his employees from their residence to the factory and back."
9. The plea of discrimination raised on behalf of the appellants was also rejected by the Supreme Court.
10. In The Associated Cement Co. Limited, Bhupendra cement Works, Surajpur's case (supra), I had the occasion to consider the challenge to the constitutionality of the Validation Act and legality of the action of the respondents to levy tax in a case similar to the present one. While dealing with the applicability of the ratio of the Supreme Court's judgment in M/s Tata Engineering and Locomotive Co. Limited's case (supra), I had observed as under: -
"After the coming into force of the Punjab Passengers and goods Taxation (Haryana Amendment and Validation) Act, 1988 the definition of passenger has undergone a drastic change. Under die unmended provisions only a persons travelling in a public service vehicle was covered by the definition of the passenger. The amended definition of motor vehicles and the new explanation appended below Section 3(1) have brought within the ambit of the charging section even those persons who travel in motor vehicle without paying fare or by paying concessional fare. Thus the employees of a Company like the petitioner who travels in the buses of the petitioner without paying fare comes within the amended definition of passenger and in my opinion, the petitioner cannot derive any benefit from the judgment of the Supreme Court in M/s Tata Engg. and Locomotive Co. Ltd 's case (supra)."
11. The question as to whether the State Legislature was competent to enact the Validation Act was answered in the following words:-
"The power of the Legislature of the State to levy tax on passengers cannot be disputed. Entry 56 of List II of the 7th Schedule empowers the State Legislature to enact law for imposition of tax on passengers and goods. By enacting Act No. 2 of 1988 the Legislature of the State has merely removed the defect/lacuna in the definition of the words "passengers' and the expression 'motor vehicles' and also enlarged the scope of the charging section i.e. Section 3 of the Act of 1952. By doing so the Legislature cannot be said to have acted beyond its competence. Likewise, there is nothing illegal or unconstitutional in giving retrospective effect to Amending Act No. 2 of 1988 because it is a settled proposition of law that the Legislature can enact laws prospectively as well as retrospectively."
12. The aforesaid view of the Court is based on the ratio of the decisions of the Supreme Court in Rai Ramakrishana and Ors. v. State of Bihar; A.I.R. 1963 S.C. 1667, Prithvi Cotton Mills Ltd. and Anr. v. Borach Borough Municipality and Ors.; 1969(2) S.C.C. 283, Bhubaneshwar Singh and Anr. v. Union of India and Ors.; 1994(6) S.C.C. 77, Mahe Beach Trading Co. and Ors. v. Union Territory of Pondicherry and Ors.; 1966(3) S.C.C. 741, Comorin Match Industries (P) Ltd. v. State of Tamil Nadu, 1996(4) S.C.C. 281 and Indian Aluminium Co, and Ors. v. State of Kerala and Ors.,1996(7) S.C.C. 637.
13. In view of the above discussion, I hold that the validation Act neither suffers from lack of legislative competence in the State nor it is Violative of Articles 14, 19 and 300A of the Constitution of India and the writ petition is liable to be dismissed. Ordered accordingly.