State of Himachal Pradesh and Ors. Etc. Etc. v. Nurpur Private Bus Operators Union and Ors. Etc. Etc.
BHARUCHA, J. Civil Appeal Nos. 6466-6476 of 1995 :
Under challenge by the State of Himachal Pradesh is the judgment
of a Division Bench of the High Court of Himachal Pradesh delivered on
writ petitions filed under Article 226 of the Constitution to challenge
amendments to the Himachal Pradesh Passengers and Goods Taxation
Act, 1955 and the Rules framed thereunder. The High Court a!Jowed the
C writ petitions, coming to the conclusion that confining the payment of tax
under the said Act to the mode of payment by lump sum made the
· provision invalid.
. Section 3 of the said Act is the charging secion. It provides, in so far
D as is relevant :
"3. Levy of Tax. - (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
such rates not exceeding ....... as the Government may, by notifica-
E tion, direct." (Emphasis supplied.)
Section 4 lays down the method of collection of the tax and states
that the tax shall be collected by the owner of the motor vehicle and paid
to the State Government in the prescribed manner. The proviso thereto,
which is under chdlenge, reads :
"Provided further that in case of motor vehicles (including the
stage or contract carriages), other than those specified in the first
proviso, in which the passengers are carried, the State Government
may assess the tax ...... . at lump sum in the manner prescribed,
taking into consideration the registered capacity_ of the vehicle and
the distance travelled or to be travelled by such motor vehicles
under a permit issued to such vehicles." (Emphasis supplied.)
The Rule made to effectuate the said proviso, which was also the
subject matter of challenge, laid down the formula for such assessment of
H the lump sum tax. The formula was this :
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STATE v. NURPURPRIVATE BUS OPERATORS UNION [BHARUCHA, J.] 433
"Number of seats x number of scheduled kilometers x 3/5 x rate of A
passengers tax x rate per kilometer.
Explanation : In this formula, 3/5 represents average occupancy
taken at sixty per cent of the 1mmber of seats.'' (Emphasis supplied)
It may be mentioned that, earlier, the relevant proviso had provided
that in case of contract carriage the State Government "may accept a lump
sum in lieu of the tax chargeable on fare in the manner prescribed". This
proviso was challenged. This Court, in Mis. Sainik Motors, Jodhpur and Ors.
v. The State of Rajasthan, (1962] 1 SCR 517, upheld the proviso for the
reason that "payment to lump sum is not obligatory, and a person can elect
to pay tax calculated on actual fares and freights .... There is no compulsion
for any operator to elect to pay a lump sum if he does not choose to do
so."
As far as the said Act, as it now stands, is concerned it is plain from D
Section 3 thereof that the levy of the tax is on "all fares ...... .in respect of
all passengers carried ....... ". The proviso to Section 4 that is under challenge
takes into account for the purpose of assessment of the lump sum tax only
"the registered capacity of the vehicle and the distance travelled or to be
travelled ........ ". It takes no account of "all fares ..... in respect of all pas
sengers carried ....... ", and it makes it obligatory for the operator to pay such E
lump sum tax.
Learned counsel for the appellant-State submitted that the said
Section 4 and Rule had been so amended having regard to surveys made
and data collected by the State Government and with a view to prevent tax F
evasion. This may be so, but there can be no generalisation of tax that can
be levied under Section 3. It can only be levied with due regard to all fares
in respect of all passengers carried by the particular operator. No
hypothetical assumption can be made about how many passengers an
operator has carried. The amendment of the said Section 4, by the inclusion
of the proviso quoted above, is . beyond the scope of the said Act. It is, G
therefore, unnecessary to consider Rule 9, as amended, whose terms also,
in facts, leave the matter in no doubt.
The State may now make assessments of passenger tax on the basis
that is provided for in Section 3 of the Act. H
434 SUPREME COURT REPORTS [1999) SUPP. 3 S.C.R.
A The Civil appeals are dismissed with costs.
Civil Appeals Nos. fJ47711995 and 6480/1995 :
The High Court, in the judgment afore-mentioned, held that the levy
and realisation of tax on the basis which had been held to be invalid by it
B "for the period between 1st April, 1991 andf 30th Septemper, 1992 shall
not stand invalidated ......... We. propose to direct that the declaration made
by us today shall be applicable prospectively and with effect from October
1, 1992 alone." Some operators challenge the correctness of this. They are
right, for the doctrine of prospective over-ruling cannot be utilised by the
High Court. Once the High Court came to the conclusion, rightly, that the
C concerned provisions were invalid, it was obliged to so declare and, con
sequently, the collections made thereunder stood invalidated.
These civil appeals are, therefore, allowed and the direction of the
High Court insofar as it relates to prospective over-ruling is set aside. The
D judgment and order of the High Court shall also operate for the period
between 1st April, 1991 and 30st September, 1992.
No order as to costs.
S.V.K. Appeals dismissed/allowed.
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