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Judgment
Veeraswami, J.—The Petitioners are transport operators of either buses or lorries and challenge the validity of demands made on them for
payment of taxes levied under the Madras Motor Vehicles (Taxation of Passengers And Goods) Act (XVI of 1952). As the points raised are
common to the petitions, they have been heard together. For a decision on those points, it is not necessary to notice the facts in each petition but
will suffice to briefly set out those in Writ Petition No. 823 of 1963.
The Petitioner in that petition, like the other Petitioners, held at the relevant period primary permits issued by the Transport Authorities in the
State of Andhra Pradesh under the Motor Vehicles Act as it was then in force, countersigned by their counterparts in the State of Madras under
the provisions of the Motor Vehicles Act, the routes to which they related being inter-State routes. The Petitioner plied his stage carriage since
1949 on a permit issued then by the Regional Transport Authority, Chittoor on the route Chittoor to Tiruttani via Sholinghur the entirety of which
lay at that time in the composite State of Madras. With effect from October 1, 1953, under the Andhra State Act, 1953, the State of Andhra
Pradesh was separated. As a result, 40 miles out of the total length of 42 miles of the route lay in the State of Andhra Pradesh and the remaining
one and half miles in the State of Madras. By reason of the Pataskar Award and subsequent legislation, the Tiruttani taluk was on and from April
1, 1962, transferred to the State of Madras. The result was 32 miles of the route came within the limits of the State of Madras leaving only the
remaining distance of ten miles in the State of Andhra Pradesh. After the formation of the State of Andhra Pradesh, the Madras Motor Vehicles
Taxation Act, 1931 was made applicable to it and so too the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952. Under the
former Act was payable a tax of Rs. 30 per seat per quarter and under the latter surcharge of 37 nP. per seat per year per mile or Rs. 12.50 per
seat per quarter as compounded surcharge. After the formation of the State of Andhra Pradesh, the Madras Government issued a notification
under the earlier Act exempting the stage carriages and lorries registered and normally kept in the State of Andhra Pradesh from paying the tax
under its provisions while plying under counter-signatures in the State of Madras. Sub-rule (5) of Rule 1 which was added to the Schedule to the
later Act likewise exempted stage carriage and public carriers similarly registered and normally kept in the State of Andhra Pradesh from payment
of surcharge to the State of Madras while plying binder counter-signatures in that State. It appears that on April 1, 1963, the State of Andhra
Pradesh repealed the said Act in force in that State and passed a consolidated legislation, namely, the Andhra Pradesh Motor Vehicles Taxation
Act, 1963. This Act too contains a Schedule under which the tax payable per seat per quarter was enhanced to Rs. 67.50 nP. per seat per quarter
which was in excess of the then total tax and surcharge payable under the earlier enactments.
By G.O. Ms. No. 1228, Home, dated March 26, 1962 passed in exercise of its powers u/s 11 of the Madras Motor Vehicles Taxation Act,
1931, the Madras Government exempted lorry owners plying on the inter-State routes from liability to tax under that Act. But the Regional
Transport Officer, Vellore, citing this order in a circular, called upon certain inter-State lorry operators to pay surcharge under the Madras Motor
Vehicles (Taxation of Passengers and Goods) Act, 1952, on the assumption, that the exemption in the Government Order did not cover their
liability under the 1952 Act. Some of the owners filed writ petitions which this Court on January 8, 1963 allowed on the view that so long as Sub-
rule (5) of Rule 1 in the Schedule to the 1952 Act was in force, no surcharge could be collected from those lorry owners. Later, by G.O. Ms. No.
2724, Home, dated August 24, 1963, the Madras Government, in exercise of its powers u/s 4(2) of the 1952 Act, dropped Sub-rule (5) of Rule
1 with effect from April 1, 1962, and also omitted Sub-rules (3) and (4) of that rule. On August 1, 1963, the Regional Transport Officer,
Chingleput, demanded from the Petitioner in Writ Petition No. 823 of 1963 a sum of Rs. 1,663.20 nP. as surcharge due under the 1952 Act for
the period April to December 1962.
The contention for the Petitioner, which, as I said, is common to the other Petitioners, is that the State Government, in the exercise of its power
u/s 4(2) of the 1952 Act, had no authority to repeal Sub-rule (5) of Rule 1 aforesaid with retrospective effect from April 1, 1962. In my view, the
contention is well-founded. The Motor Vehicles (Taxation of Passengers and Goods) Act, 1952, was enacted to provide for the levy of a tax on
passengers and goods carried in stage carriages and public carrier vehicles in the State of Madras. The power of the State Legislature to make this
fiscal legislation is contained in Entry 56 in List II of the Seventh Schedule to the Constitution. This entry relates to taxes on goods and passengers
carried by road or on inland waterways. Public carrier is defined in the Act to mean a motor vehicle carrying or adapted to carry goods for hire or
reward and stage carriage means a motor vehicle carrying or adapted to carry more than six persons excluding the driver at separate fares paid by
the passengers. Section 3 is the charging section and says that from and after the commencement of the Act, there shall be levied and paid to the
Government a tax on all passengers, luggage and goods carried by stage carriages and on all goods transported by public carrier vehicles at the
rate mentioned as so many naye Paise in the rupee on the fares and freights payable to the operators of such stage carriages and at the rate of so
many naye Paise in the rupee on the freights payable to the operators of such public carrier vehicles. Section 4(1) provides for composition of tax
on an application for the purpose, by the operator. A composition is allowed under the conditions specified in the Schedule and by payment of the
compounded fee in lieu of the tax, calculated in the manner specified in the Schedule to the Act. Sub-section (2) of Section 4 gives powers to the
Government to amend the Schedule from time to time subject to the approval of the Legislative Assembly of the State. The rest of the provisions of
the Act relate to submission of returns, mode of remittance of tax, the procedure in cases of default of payment of tax, assessment on the escaped
tax, penalty for non-payment of tax, recovery of arrears, appeals against demands, offences and penalties, composition of offences and powers to
make rules for the purposes of the Act including on matters specified. The Schedule mentioned in Section 4, as it stood originally, contained two
rules. Rule 1 provided that the composition fee shall be calculated for the entire unexpired period of the currency of the permit or for a period of
three months whichever is less at the rate (a) in the case of stage carriage of 37 nP. per seat per year per mile, of the total mileage permitted or at
the option of the operator of twelve rupees and 50 nP. Per seat per quarter and (b) in the case of a public carrier vehicle of twenty-two rupees and
50 nP. per month. This rule has since been amended by Madras Act XI of 1962 enhancing the rate and including also a new Sub-rule (1-A).
Under Sub-rule (2) the amount of composition fee calculated with reference to Clause (a) or Clause (b) of Sub-rule (1) should be paid at the
option of the operator either quarterly or in three equal monthly installments. By G.O. Ms. No. 3527, Home, dated December 13, 1955, Sub-rule
(5) was inserted which read:
In pursuance of the agreement between the Government of Madras and Andhra that in respect of stage carriages and public carriers plying on
routes lying partly in the Madras State and partly in the Andhra State, a composition fee calculated with reference to Clause (a) or Clause (b) of
Sub-rule (1) shall, with effect from the 1st October 1955, be collected in the State where the vehicles are registered and normally kept and the
proceeds of the composition fee so collected shall be allocated between the two States in the manner agreed upon, it is hereby provided that Sub-
rule (4) shall cease to be operative on and from the 1st October 1955 and that the composition fee calculated with reference to Clause (a) or
Clause (b) of Sub-rule (1) shall, with effect from that date, be paid in the State where the vehicles are registered and normally kept, in respect of
such inter-State vehicles.
It is this sub-rule which the Government purported to repeal by G.O. Ms. No. 2724, Home, dated August 24,1963, with effect from April 1,
1962.
It is elementary that the powers of the Legislature within the ambit of the relative legislative entries in the State List are plenary in character and
are not circumscribed except by the limitations placed on them or their exercise by the Constitution itself. And, therefore, it is competent for the
State Legislature to make a law with prospective or retrospective effect. The power to make retroactive or retrospective legislation belongs to the
Legislature. In the plenitude of its powers, the Legislature, while making an enactment, may entrust the executive with power to make rules for
carrying out the purpose of the Act generally and on specified matters. In doing so, the Legislature may specify that the rule making power may
extend to making a rule with retrospective effect. When it does not say so expressly or by necessary implication, can it be said that the power
entrusted by the Legislature to the executive to make rules will in itself carry with it the authority to make rules with retrospective effect? In my
opinion clearly not. The executive in making the subordinate legislation is confined strictly to the limits and terms of the conferment of the power to
do it. The power to make a rule can be exercised only r. with prospective effect unless, of course, the Legislature also makes it clear that the
power extends to make rules with retrospective effect.
If authority is required for this proposition, reference may be made to M.L. Bagga v. Murhar Rao AIR 1956 Hyd. 35, 38 and Kuti Krishna Nair
v. State of Madras and Ors. (1961) K.L.J. 587. The first was a case under the Evacuee Interest (Separation) Rules, 1951. The question there
was whether Clause (b) to Sub-rule 3 of Rule 11-E could not operate retrospectively so as to affect pending proceedings. It was held:
In our opinion, the rule-making authority does not possess plenary power to give the subordinate delegated legislation retrospective operation
unless and until that power is expressly conferred by the parent enactment.
A similar view was expressed by the Kerala High Court in the second case cited. For the Petitioner, my attention was also invited to G.P.
Stewart Vs. Brojendra Kishore Roy Chaudhury, which was concerned with the Assam Court of Wards Amendment Act, 1937. The Act received
the assent of the Governor on a certain date but it provided that it would come into force only on such date as the Provincial Government might by
notification appoint in that behalf. A month after the Governor had given the assent, the Government notified that the Act would come into force
from the date on which the Governor had given the assent. The question was whether the retrospective notification appointing a date for the
commencement of the Act earlier than the date of the notification itself was intra vires. The Court answered the question in the negative. Mitter and
Narasinga Rau JJ., observed at page 630:
It seems to us that the same considerations that have led to the enunciation of the rule against retrospective operation of statutes would also lead to
the adoption of a similar rule in the case of statutory notifications. That is to say, unless the parent Act itself clearly authorizes the issue of a
notification with retrospective effect, it must be presumed that such a notification is forbidden. It is seldom that retrospective notifications are
contemplated; and on the rare occasions when they are contemplated, it is usual to say so plainly.
As such instances, the learned Judges referred to Section 1 of the Transfer of Property Act, 1882 and Section 3 of the Succession Act, 1925. I
think, therefore, that the principle is well established that the executive, in making subordinate legislation in exercise of its delegated rule-making
power cannot give retrospective effect, unless the enabling Act confers expressly or by necessary intendment such power as well. This is because
the power to make retrospective legislation is in itself a legislative power and naturally belongs to the Legislature which, unless delegated, is not
available to a subordinate legislative authority like the executive.
It has been argued for the State Government that in this case what the Government did was not to make a rule as such with retrospective effect
hut only to drop Sub-rule (5) with retrospective effect. But on principle this distinction is without a difference for the repeal of the sub-rule was in
exercise of the power u/s 4(2) and the power was exercised as so to have retrospective effect in dropping the sub-rule on and from a date earlier
than the date of the Government order itself. I hold, therefore, that G.O. Ms. No. 2724, Home, dated August 24, 1963, inasmuch as it purported
to repeal Sub-rule (5) with effect from April 1, 1962, is invalid and that the repeal of the sub-rule is effective only on and from August 24, 1963.
That means Sub-rule (5) was in full operation until that date. The result will, therefore, follow that any demand made on the Petitioners for payment
of tax u/s 3 or compounding fee u/s 4(1) for the period anterior to August 24, 1963 would be without the authority of law and should be quashed.
It is next contended for the Petitioner in Writ Petition No. 823 of 1963 that the demand on him was made on August 1, 1963 ignoring the
judgment of this Court in Writ Petition No. 986 of 1962 and on this ground to the demand on the Petitioner should be quashed. Though on the
view I have taken above I do not think it necessary to decide this point, I cannot but observe that the principle of the judgment in that writ petition
had a general application and was not confined merely to the parties to that petition, and that in such a case, the Transport Authorities were bound
to give effect to the principle of that judgment. The principle laid down by this Court in that judgment was that so long as Sub-rule (5) of Rule 1
stood unrepeated, no tax or fee could be demanded and collected from the stage carriages and public carriers covered by the sub-rule. The
Transport Authorities could not with impunity ignore and decline to follow it in the case of operators other than the Petitioners before this Court in
that writ petition. But I think no serious view need be taken of the argument of the Petitioners in these cases because possibly the Regional
Transport Officer, Chingleput had inadvertently overlooked the judgment of this Court in that writ petition and did not intentionally by-pass it.
A further point was urged on behalf of some of the Petitioners who operate lorries in the inter-State route which is that Section 3 and 4(1) read
with the Schedule to the Act, in so far as they relate to levy on lorries operate extra-territorially and are to that extent invalid. The argument was
confined to levy on lorries because in the case of stage carriages, the composition fee u/s 4(1) is calculated, as seen from the Schedule to the Act,
on the basis of so many naye paise in the rupee per seat per year per mile and the fee so calculated would be confined to the mileage of the route
within this State. Section 3 states that there shall be levied a tax on public carrier vehicle at the rate of certain naye paise in the rupee on the freights
payable to their operators. As I already mentioned, Section 4(1), which relates to the composition, of tax provides that the composition fee would
be calculated in the manner specified in the Schedule to the Act, and in the Schedule, the provision is that, in the case of a public carrier vehicle, a
fixed specified amount is payable per month. The argument for the lorry operators is that the fee so calculated fails to take note that the freight
payable to operators of public carrier vehicles like some of the Petitioners here on the inter-State route, covers the entire route and is not confined
to that part of the route which lies within the limits of the State of Madras. In my view, there is no substance in this contention. The preamble to the
Act makes it perfectly clear that the Act is intended to provide for levy of a tax on passengers and goods carried in public carrier vehicles in the
State of Madras. Sub-section (2) of Section 1 restricts the territorial operation of the Act to the limits of the State of Madras. It is true that Section
3 says that the levy on public carrier vehicles shall be at the rate of so many naye paise on the freight payable to the operators of such vehicles. But
the plain meaning of this section, as I think, is that the rate in the rupee is to apply on the freight proportionate to that part of the inter-State route
which lies within the limits of the State of Madras. Even if I am not right on this view, in none of these cases before me, the levy was on the basis of
the rate at so many naye paise in the rupee on the freight paid to the operators concerned. The demands on the lorry operators here were on the
basis of Section 4(1) read with the Schedule to the Act. The Schedules prescribes as was mentioned earlier, a fixed amount per month payable for
the public carrier vehicle and this amount is not fixed in terms of the route. The levy itself is on goods carried by road and the fixed amount payable
for a public carrier vehicle is not arrived at on the basis of freight or mileage operated by the vehicle in the State of Madras. The argument based
on extra territorial operation is therefore, rejected.
In the result, the demands on the Petitioners in so far as they relate to the period prior to August 24, 1963, are without authority and are
hereby quashed. To that extent the petitions are partly allowed. In other respects, they are dismissed. No costs.