R Gandhi and anr Vs Union of India Uoi Rep by the Ministry of Law Justice and Company Affairs and ors - Citation 826092 - Court Judgment

Judgment:
ORDER

Janarthanam, J.

1. All these actions-this Batch of Writ Petitions-filed by Importers-Dealers or otherwise - of motor vehicles into local area from any 1997/3/17 place outside the State of Tamil Nadu for use or sale herein- owning motor vehicle at the time of its entry into the local area-are analogous in nature.

2. The thrust and focus - either on pure questions of law constitutional or otherwise or on facts the existence of which is a matter of proof-giving risk to legal figment ~ are mostly common or similar.

3. Irrespective of the nomenclature of these actions-Writs - Whether for Declaration, mandamus. Prohibition and what not - the fact remains-constitutional questions revolving on :

(i) Legislative competence ;

(ii) Colourable piece of Legislation;

(iii) Violation of rights under Articles 301 and 304 of the Constitution of India (for short Constitution);

(iv) Absence of prior approval of the President of India under the Proviso to Article 304(b) of the Constitution.;

(v) Challenge on the ground of Articles 14 and 300A of the Constitution : and allied matters therefor were raked up, apart from the applicability of the Legislation impugned to the factual matrix of the individual cases. Such being the case, we rather feel, better it is, they are dealt with and decided by a common Order with ease and grace and without any difficulty whatever.

4. The factual matrix giving rise to all these actions may, in brief, be related.

(a) As of now, there is no manufacture of motor vehicles in the State of Tamil Nadu. Motor vehicles manufactured outside the State are imported into this State, either by Dealers or others, for sale or use herein. Motor Vehicles manufactured in a State, either by Dealers or others, for sale or use herein. Motor Vehicles manufacturers in a State are being sold by the manufacturers in the other States, more or less at the same price, except by adding to the price, the cost of transport, which may vary from State to state, depending upon the distance factor from the place of manufacture. However, the ultimate price or cost of such vehicles varies very widely to the dealer or consumer in a State as a consequence of imposition or levy of sales-tax and others taxes at different rates by different States. For instance, the imposition or levy of sates- tax on motor vehicles in the Union Territory of Pondicherry is at 4% whereas in the State of Tamil Nadu, it is 13%. Thus, there is a different in tax to the tune of 9%. Therefore, the costs of a motor vehicles purchased in the Union Territory of Pondicherry will be less by 9% that is to say, if the invoice price of a vehicle is Rs. 3 lakhs, there will be a difference in price to the tune of Rs. 27,000. Thus, the margin of difference in the ultimate price of the vehicle will vary, depending upon the rate of levy and collection of sales-tax on the invoice price of the vehicle. The rate of sales-tax on motor vehicles in certain other States, it is said, is comparatively lesser than the rates charged in the State of Tamil Nadu.

(b) This sort of situation impelled the dealers and consumers to the purchase of motor vehicles in the Union Territory of Pondicherry and in the other States as well where the tax structure is comparatively low. The concomitant consequence that flows from such a situation was that the State _. of Tamil Nadu suffered, in a large measure, loss of revenue, by way of sales tax on the sale of motor vehicles.

(c) In order to compensate or off-set the loss so suffered the State of Tamil Nadu contemplated or devised a measure for imposition of Entry Tax on motor vehicles brought from outside and imported into this state, either by dealers or consumers for the purpose of sale or user herein which resulted in the passing of necessary and requisite Legislation in the year 1990, viz., The Tamil Nadu Tax on Entry of Motor Vehicles into Local Area Act, 1990 (Act XIII of 1990 for short 'Principal Act'). The Legislation so passed underwent amendments in the year 1991 viz. The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Act, 1991 (Act XLV of 1991 for short 1991 Amendment Act) and 1997 as well viz., The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Act, 1997 (Act XIV of 1997 -- for short 1997 Amendment Act). The necessary and requisite Rules for implementing the provisions of such a legislation were also brought into picture, viz., The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Rules, 1990 (for short 'Rules').

(d) Even subsequent to the passing of such a Legislation and insertion of an advertisement in the daily newspapers warning the would be assessees' - penal consequences, they have suffer for non-payment of entry tax within a time frame, the response was almost nil in the sense of there being no collection of entry tax, as a consequence of returns not being filed voluntarily, resulting in assessment orders, not being passed and thereby, the revenue to the State getting diminished.

(e) In such a situation, there was no option left to the State except to strictly implement the machinery provisions for realisation of the tax. Penal actions besides actions for impounding vehicles had been resorted to for realisation of the taxes which opened floodgate or writ petitions of different nomenclature, as aforesaid, being filed day in and day out and interim orders of such a nature obtained as to effectively prevent the State from implementing the provisions of the Legislation so passed. The number of writ petition filed, resulting in interim orders being obtained as aforesaid swelled to 600.

5. According to the petitioners, the levy and collection of entry tax is illegal and therefore, they seek the following reliefs :-

(i) Declaration

(a) that the levy of entry tax is violative of the provisions of the Constitution as beyond the legislative competence of the State;

(b) that the provisions of the Principal Act are ultra vires of the provisions of Art 286, as also Articles 301, 304, 14 and 300-A of the Constitution

(d) consequent reliefs, such as quashing the notices requiring them to deposit the taxes ;

Prohibiting the competent officers from proceeding with the pending assessment:

restraining them from levying tax; and a direction to refund the tax illegibly collected.

(ii) The Registry of this Court, obviously noticing such an alarming situation and the public interest, involved therein, put up a note on the administrative side, under the caption.

'W.P. No. 15960 of 1996 etc., Batch to

THE HONOURABLE THE CHIEF JUSTICE

as below

It is most respectfully submitted that W.P. No. 15960 of 1996 .. etc., arc hatch of more than 600 Writ Petitions filed under Motor Vehicles Act (Entry Tax) for a writ of madamus, forbearing the respondents and their subordinates in any manner demanding or collecting entry Tax under the provisions of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 from the petitioners for their cars and the above-mentioned petitions are pending on the file of the High Court.

In this connection it is further submitted that in all the above mentioned cases interim direction(s) have been given and Rule Nisi(s) have (been ordered) to be issued.

In the circumstances kind orders of your Lordship are solicited as to whether the above mentioned writ petitions may be listed for hearing and if directed before the Hon'blc Bench before whom the same may be listed for hearing.

(iii) On the Note so presented, the then Honourable the Chief Justice of this Court, minuted as below

Post on 10-12-1996 before the 1st Bench. Publish the Draft List on 5-12-1996 with a note that they will be posted before the 1st Bench on 10-12-1996.

(iv) Accordingly, the said batch of writ petitions was posted Before the First Bench consisting of The Hon'ble the then Chief Justice and AR. Lakshmanan, J. On 10-12-1996, on which date, an order as below resulted in:

Counter is filed by the State. However, it is not served on the learned counsel appearing for the petitioners. It is also submitted on behalf of the petitioners that after the service of the counter, they may be given sometime to file reply if any. In the meanwhile, Christmas vacation is intervening. Therefore, it is submitted that these cases may be posted in the first week of January, 1997. In the light of the submissions made by learned counsel for the petitioners, we post these matters on 6th January 1997. The counters will be served on the petitioners counsel tomorrow. Reply, if any, to be filed before 6-I-1997.

In the meanwhile second set of papers shall also be prepared by the office in about six matters which cover all the grounds.

The present list may be retained by learned counsel for the petitioners. If there arc other matters, additional list will be printed.

Call these matters on 6-1-1997.

(v) It appears, in the meantime this batch of Writ Petitions swelled to 1,000. Most of those Writ Petitions, it appears, had been posted on 6-1-1997. But they did not reach for hearing.

(vi) On 7-1-1997, the First Bench, in this Batch of Writ Petitions, passed an order as below :

In all these writ petitions, which are about more than 1000, the constilutionality of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 (for short the Act) is challenged.

2. These matters have been directed to be posted before a Division Bench by the Hon'ble the Chief Justice in exercise of his power under Rule 1--A of the High Court of Madras Appellate Side Rules (for short the Rules) to avoid multiplicity of the proceedings and also in view of the fact that the constitutionality of the Act is challenged. Thereafter, certain writ petitions have also been referred to a Division Bench by a learned single Judge. All the matters arc posted before us, When these matters came to be posted before the Division Bench on 10- 12-1996 they came to be adjourned to 6-1-1997 as the counter of the State was not served on the learned counsel for the petitioners.

3. When these matters were taken up for hearing. Mr. Gandhi, learned Senior Counsel appearing for some of the petitioners and also other learned counsel appearing in other matters submitted that these matters should not have been ordered by the Hon'ble the Chief Justice to be heard by a Division Bench, as the same would affect the right of appeal.

4. Of course, these writ petitions have been directed to be posted by the Chief Justice before a Division Bench in exercise of the power under Rule 1-A of the Rules which reads thus :

Every petition under Article 226 of the Constitution except that specified in Rule 2(4) shall be posted before a single Judge or a larger bench, as the Chief Justice may direct.

However, I as the Chief Justice, have ordered on the administrative side in exercise of the power under Rule 1-A of the Rules of the High Court, Madias. Appellate Side, for posting these matters before a Division Bench. Therefore, I do not consider it appropriate for me to decide this question, though I do not see any justification in raising such a contention.

5. Therefore, we direct the Additional Registrar (Judicial) to obtain orders from the Hon'ble the Chief Justice for posting all these matters, before a Division Bench in which the Hon'ble the Chief Justice will not be a member.

(vii) This batch of writ petitions have been consequently directed to be posted before us (Janarthanam and K. Natarajan, JJ.) initially for two days, namely, on the 17th and 18th of January, 1997 by printing a special cause list under the caption,

Writ Petitions challenging the collection of Entry Tax under Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.

with a request to the Advocates to retain the list till all the cases on the list are disposed of thereby indicating that the list would not be again printed.

(viii) On the 17th and 18th January, 1997, arguments in this batch of Writ Petitions were heard in part. Mr. Ravi, learned Counsel appearing for some of the writ petitioners commenced his arguments and at that time, it was indicated to the said learned counsel that arguments were expected to be advanced, both on the question of maintainability as well as on merits. The said learned counsel canvassed arguments on the question of maintainability for two days, that is to say, on the 17th and 18th of January, 1997 and this batch of writ petitions was again posted for further arguments on those questions on the 22nd January, 1997 on which date the said learned counsel completed his arguments on the question of maintainability.

(ix) When the said learned counsel was asked to canvas, arguments on the question of merits of the writ petitions, he submitted that it was the consensus of the Bar that the question of maintainability should be decided first, before every arguments on the other question revolving on merits are advanced.

(x) Mr. R. Gandhi, learned Senior Counsel appearing for some of the petitioners was not present in Court on the 17th and 18th January, 1997 on account of some illness. He was, however, present in Court on the 22nd January, 1997 and endorsed the view of Mr. R. Ravi. The other learned counsel appearing in this batch of writ petitions also endorsed such a view.

(xi) To learned members of the Bar, we pointed out that posting of this batch of writ petitions before us is for final disposal on merits and on the question of maintainability as well and therefore, piecemeal arguments on both the questions cannot at all be heard and different decisions given separately. To such a poser made by us, Mr. Ravi and other learned Members of the Bar represented that a discretion vests in this Court to decide the question of maintainability first before every arguments are to be advanced on the question of merits in this batch of writ petitions.

(xii) No doubt true it is that a discretion in fact, vests in us to do so. Such an exercise of discretion must have to be performed in a judicious manner. If the discretion vested in us is exercised in deciding the question of maintainability alone at the first instance, it is likely to spell disastrous consequence of causing prejudice to the cause of justice, in the sense of the very question on merits to be decided by this Court later is likely to get the proceedings protracted for unduly long, without there being any reason for such protracted proceeding. If both the questions, as referred to above, are decided at one and the same time, there is no likelyhood of any sorts of prejudice being caused to any of the parties, inclusive of the interests of the State . In this view of the matter, we feel impelled to exercise our discretion in such a way as to hear this batch of writ petitions, both on the question of maintainability as well as on merits. This aspect of the matter had been duly taken into account by Our Lord the Honourable the Chief Justice, and that is getting reflected by the two reasons, assigned therefore in the administrative order, while directing the posting of this batch of Writ Petitions before us. They are :

(i) Avoidance of multiplicity of Proceedings ; and

(ii). Challenge of the Constitutionality of the aforesaid Act.

(xiii) Taking these two aspects into consideration, the Honourable the Chief Justice posted this batch of writ petitions before us for final disposal, inclusive of the determination of the question of maintainability.

(xiv) It is prerogative of the Honourable the Chief Justice to constitute Benches of this Court and allocated work to such Benches. Judicial discipline requires that puisne Judges of the High Court comply with the direction in this regard by their Chief Justice. (Vide : Inder Mani v. Matheswari Prasad : (1996)6SCC587 ).

(xv) In view of the above decision we requested learned members of the Bar to advance arguments in this batch of writ petitions both on the question of maintainability as well as on merits. Learned members of the Bar, in a chorus voice, again reiterated their position that the order of the Honourable the Chief Justice in posting all these matters before this Bench, if construed properly, will only mean, to decide the question of maintainability only and not otherwise and so saying they also represented that they wish to seek a clarification before the Honourable the Chief Justice of this Court on this aspect of the matter and prayed for adjournment of this batch of writ petitions till 29th January, 1997 Consequently, we directed all these matters to be posted on 29th January 1997 for further proceedings.

(xvi) Some of learned counsel on record presented a Memorandum to the Registry on 24-1-1997 seeking the clarification, as stated above. The Registry drew the attention of the Honourable the Chief Justice on this aspect of the matter by putting up a Note for orders.

(xvii) On 28-1-1997 the Honourable the Chief Justice in response to the note so put up by the Registry passed an order which reads as under:

On perusing the office order dated 3-12-1996 directing posting of these cases for final hearing the order, dated 7-1-1997 passed by the 1st Bench and the office order dated 9-1-1997 passed by the CJ. and also the order (dated) 22-1-1997 passed by the D.B. of M.S.J. and K.N. JJ., I see no justification to differ from the views expressed by the D.B. in the order dated 22-1-1997. Hence, the petitions seeking clarification on the administrative side is rejected. As ordered by the D.B. consisting of M.S.J. and K.N., JJ., post these matters on 29-1-1997.(xviii) Accordingly, this batch of writ petitions was posted before us on 29-1-1997.

(xix) Arguments in this batch of Writ petitions were heard thereafter for pretty long and ultimately concluded.

(xx) Only a few of learned counsels appearing for the petitioners, viz., M/s. R. Gandhi (Senior Counsel) K.M. Vijayan (Senior Counsel), for M. Palani, R. Janakiraman, M.S. Subramaniam, M. Sundar, G. Rajagopalan, V. Raghavachari, Mythili Srinivasan, R. Srinivas and Sreekumar made submissions projecting their hues of views while the rest of learned Counsel appearing for the remaining petitioners simply adopted the arguments of the aforesaid learned Counsel for the other petitioners.

(xxi) Mr. K.V. Venkatapathi learned Advocate General, ably assisted by M/s. R. Viduthalai and Thirugnanasambandam, learned Additional Government Pleaders representing the respondents would however repel such submissions, which emerged from a few learned counsel, as stated above adopted by the other learned counsel appearing for the remaining petitioners.

6. From the pith and substance of the various hues of views, as projected by the aforesaid learned counsels appearing for the petitioners and learned Advocate General ably assisted by learned Additional Government Pleaders as stated above, representing the respondents the following constitutional and other questions, on the topics as below arise for consideration in all these cases :

I. Legislative competence ;

II. Colourable piece of Legislation ;

III. Violation of rights under Articles 301 and 304 of the Constitution;

IV. Absence of prior approval of the President of India under Proviso to Article 304(b) of the Constitution.

V. Nature of the Tax levied under the impugned Legislation;

VI. Levy of sales-tax under the facade of Entry Tax;

VII. Challenge on the grounds of violation of Articles 14 and 300A of the Constitution;

VIII. Repugnancy;

IX. Interpretation of Charging Section 3;

X. Applicability of the impugned Legislation to the factual matrix of the individual cases; and

XI. Maintainability of these actions-power of the Honourable the Chief Justice in the matter of allocation of work to the Honourable Judges by constitution of single or larger Bench.

7. We may now relate the Legislative field on the basis of which, Legislation on Entry Tax had been passed in the year 1990, the amendment made to such Legislation ;in the year 1991, the further amendment brought in 1997 and the impelling cases or factors, which compelled the State Government of Tamil Nadu to pass such a Legislation, as is getting revealed from the preamble and explanatory statement appended thereto.

8. Entry No. 52 of List II (State List) of the Seventh Schedule to the Constitution reads as under :

'52. Taxes on the entry of goods into a local area for consumption, use on sale therein.'

9. The Governor of Tamil Nadu, after obtaining necessary instructions of the President of India, in pursuance of the proviso to Clause (1) of Article 213 of the Constitution promulgated the Ordinance captioned as 'Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Ordinance, 1990 (Tamil Nadu Ordinance No. 1 of 1990) on the 19th February, 1990, published in the Tamil Nadu Government Gazette - Extraordinary issue No. 83. Madras. Tuesday, February 20, 1990, Masi 8, Sukla Thiruvalluvar Aandu 2021.

10. The Explanatory statement appended to the said ordinance reads as under :

In order to curb the evasion of sales tax on the sale of motor vehicles, which arc purchased outside the State and brought into the State, the Government have decided to levy tax on entry of Motor vehicles into Local Areas of the State either for use or sale therein. If has also been decided to exempt the vehicles registered in the Union Territory or other States fifteen months prior to registration in the State and necessary provision has been provided for. In the case of dealers, entry lax shall be leviable on the entry of motor vehicles and the tax paid by them shall be adjusted with the tax payable by them under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act I of 1959).

The Ordinance seeks to achieve the above object.

(By order of the Governor)

P. Jayasingh Peter,

Secretary to the Government

Law Department

The said Ordinance became an Act called 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 (Act No. XIII of 1990) which received the assent of the President on the 24th April, 1990 and published in the Tamil Nadu Government Gazette - Extraordinary dated April 15, 1990.

11. The object of the enactment, as stated in its preamble, is to provide for levy of tax on entry of motor vehicles into local areas for use or sale therein.

12.(a) Chapter I comprising Sections 1 and 2 as relatable to short title, extent, commencement and definitions of certain) Words and phrasecologies.

(b) Chapter II consisting of two sections, viz., Section 3 and 4 deals with the levy of tax. Section 3 being the charging Section provides for levy of tax. Section 4 provides for reduction in tax liability to the extent specified therein to two classes of importers, viz., (i) importer being a dealer in motor vehicles and (ii) importer, not being a dealer in motor vehicles.

(d) Chapter IV (Section 7 to 12) pertains to returns assessment, payment, recovery and fund of tax and exemptions.

(e) Chapter V (Sections 13 and 14) contains provisions relatable to appeals and revisions.

(f) Chapter VI (Section 15) deals with imposition of penalty under certain contingency.

(g) Chapter VII (Sections 16 to 20) comprises of miscellaneous provisions relatable to officers and servants appointed under this Act to be public servants (Section 16); Protection of action taken in good faith (Section 17) power to make rules (Section 18); restriction on registration (Section 19) and Repeal and saving (Section 20).

13. In exercise of the powers conferred by Sub-section (1) and (2) Section 18 of the Principal Act, the Governor of Tamil Nadu made the rules called 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Rules, 1990'.

(a) The said Rules consist of six Chapters, Chapter 1 (Rules 1 and 2) pertains to short title, commencement and definition of certain words and phrase- cologies

(b) Chapter II (Rules 3 to 8) deals with returns, assessments, payment of tax and refunds.

(d) Chapter IV (Rule 12) refers to power to get information.

(e) Chapter V (Rules 13 to 16) deals with appeals and revisions.

(f) Chapter VI (Rule 17) pertains to service of orders and notices.

14. The 1991 Amendment Act had been passed bringing in certain amendments to Section 3 and 4 of the Principal Act. This amendment came into force on the first day of October 1991 and it received the assent of the President on the 18th November, 1991.

15. Section 2 thereof brought in certain amendments to Section 3 of the Principal Act. In Sub-section (1) of Section 3 for the expression beginning with the words. 'The rate of Tax' and ending with the words 'General Sales Tax Act'. The expression 'The rate of tax shall be at such rate or rates, not exceeding twenty per cent as may be fixed by the Government by notification, on the purchase value of the motor vehicle' shall be substituted.

16. Section 3 thereof amended Section 4 of the Principal Act. In Sub-section (1) of Section 4 for the expression beginning with the words, 'to pay tax under the General Sales Tax Act' and ending with the words, 'Paid under this Act' the expression, 'to pay tax under the General Sales Tax Act, additional Sales tax under the Tamil Nadu Additional Sales Tax Act, 1970. (Tamil Nadu Act 14 of 1970), and the surcharge and additional surcharge under the Tamil Nadu Sales Tax (Surcharge) Act, 1971. (Tamil Nadu Act 24 of 1971) by virtue of the sale of such motor vehicle, then his liability under those Acts shall be reduced to the extent of tax paid under this Act' shall be substituted.

17. The Government of Tamil Nadu represented by the Secretary of Home Department, inserted an advertisement in an English daily - The Hindu, dated 16-10-1996 under the caption.

FOR ATTENTION OF VEHICLE OWNERS WITH REGISTRATION

NUMBERS OTHER THAN THOSE OF TAMIL NADU

Which runs thus

Attention of those vehicle owners who have ceased to reside at the address recorded in the Registration Certificate is drawn to the provision of Section 49 of the Motor Vehicles Act which gives 30 days time to intimate the change to the RTO in whose jurisdiction the new address lies. Failure to do so is an offence punishable under Section 177 of the Motor Vehicles Act.

Section 3(1) of the Tamil Nadu Entry of Motor Vehicles into Local Areas Act provides for the levy of entry tax on those motor vehicles which are brought into the State either for use or sale and are liable for registration in the State under the Motor Vehicles Act. Those who fail to comply with the provisions of this Act are liable to be penalised under Sections 15(1) and 15(2) of the Act.

All owners of vehicles bearing the registration number of other States but residing in Tamil Nadu are reminded that they should apply before 15th November, 1996 to the Registration Authorities concerned for recording the change of address and also pay the Entry tax at the prescribed rate Failure to do so would entail penal action under provisions of the Motor Vehicles Act and the Tamil Nadu Entry of Motor Vehicles Act.

For further details please contact the Regional Transport Officers in whose jurisdiction their new address lies.

18. In exercise of the powers conferred by Clause (1) of Article 213 of the Constitution the Governor of Tamil Nadu promulgated an Ordinance called, 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Ordinance, 1997 (Tamil Nadu Ordinance No. 1 of 1997).

(a) Sub-clause (2) of Clause I thereof says that all sections, except clause (1) of Section 2 shall come into force at once and clause (1) of Section 2 shall be deemed to have come into force on the 1st day of April 1996.

(b) Clause 2 thereof amended Section 3 of the Principal Act thus

(i) In Sub-section (1) of the Section 3 for the expression beginning with the words, 'The rate of tax' and ending with the words, 'purchase value of the Motor Vehicle', the following shall be substituted namely :-

The tax shall be -

(i) where the importer is a dealer in motor vehicles at such rate or rates, not exceeding twenty per cent, as may be fixed by the Government by notification on the purchase value of the motor vehicle.

(ii) where the importer is not a dealer in motor vehicles equal to the amount of tax that would have been payable under the General Sales Tax Act had the vehicles been purchased in the State.

(c) Sub-clause (2) to Clause 3 thereof amended the proviso to Section 3 of the Principal Act, viz., for the said proviso, the following proviso shall be substituted namely :-

Provided that in respect of any motor vehicle which was registered in any Union Territory or any other State under the law relating to motor vehicle :-

(a) before the 10th September, 1996 no tax shall be levied and collected if the owner of such vehicle applies for the assignment of a new registration mark in this State after a period of fifteen months from the date of its registration.

(b) On or after the 1 Oth September, 1996, no tax shall be levied and collected, if the owner of such vehicle applied for the assignment of a new registration mark in this State after a period of eighteen months from the date of its registration.

(d) Clause 3 thereof amended Section 4 of the Principal Act. In Sub-section (1) of Section 4 for the expression, 'additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970), Tamil Nadu Act 14 of 1970), and the surcharge and additional surcharge under the Tamil Nadu Sales Tax (Surcharge) Act. 1971, (Tamil Nadu Act 24 of 1971) the expression 'and additional Sales Tax under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970)' shall be substituted.

(e) Clause 4 thereof inserted a new Section 15-A after Section 15 of the principal Act and it reads as under :-

15-A Impounding of Motor Vehicle- If an importer liable to. pay tax fails to pay the tax in the manner prescribed then the competent authority shall forthwith impound the vehicle in respect of which tax has not been paid and keep the vehicle impounded till the amount of tax and penalty due and payable in respect of such vehicle is paid in full.

Provided that, if the amount of tax and penalty is not paid within one month of impounding of the vehicle, the competent authority shall have power to sell the vehicle by auction in such manner as may be prescribed and apply the sale proceeds towards recovery of the tax, penalty and costs if any, incurred in the sale of such vehicle. The remainder, if any, shall be refunded to such importer.

Provided further that, if, at any time before the auction of the vehicle, the importer pays the tax penalty and costs, if any, then the competent authority may after satisfying that all the dues as aforesaid have been fully paid by the importer cancel the auction and return the vehicle to the importer.

Explanation : For the purpose of this section 'competent authority' means the assessing authority and such other person or authority authorised by the Government by notification to perform the function of the competent authority under this section

(f) Clause 5 thereof pertains to transitory provision and it reads as under.

5. The tax for the year 1996-97 in the case of an importer not being a dealer in motor vehicles in respect of a motor vehicle registered under the Motor Vehicles Act, 1988 (Central Act 59 of 1988), on or before the 5th December, 1996 in any Union Territory or any other State and becomes liable to pay tax under this Act and which has not been paid shall be payable in three equal installments, first on or before the 10th January, 1997, the second on or before the 15th February, 1997 and the third on or before the 15th March, 1997 or on such further period, as may be specified by the Government.

19. In exercise of the powers conferred by Section 18 of the Principal Act, the Governor of Tamil Nadu made the following amendments to the Tamil Nadu Entry of Motor Vehicles into Local Areas Rules, 1990:

1. In Rule 8 for the existing proviso, the following proviso shall be substituted :-

'Provided that no drawback set-off or refund as the case may be under this rule shall be granted unless the claimant importer proves that the said tax' - has in fact been paid to the competent authority of the State or Union Territory concerned.

(ii) After Rule 8, the following rule shall be inserted, namely :-

'8-A. PROCEDURE FOR AUCTION OF WE IMPOUNDED VEHICLE. - (1) When a motor vehicle is impounded under section I5-A towards non-payment of tax and penalty the competent authority shall immediately issue a notice in Form XII to the importer to pay the tax and penalty within one month from the date of impounding. If the importer fails to pay the tax, penalty and cost the competent authority shall notify the auction of such vehicle in Form XIII specifying the place where and the day and hour at which the impounded motor vehicle will be sold and should cause proclamation of the intended sale to be made by beat of drum in such place or places as the competent authority may consider necessary to give due publicity to the sale. No sale shall take place until after the expiration of the period of 15 days from date on which the notice is served.

(2) At the appointed time, the motor vehicle should be disposed of to the highest bidder. Where the motor vehicle may sell for more than the amount of tax penalty the overplus after deducting expenses of process and interest shall be paid to the defaulter.

(3) It shall be competent to the defaulter or to any person acting on his behalf or claiming an interest in the motor vehicle to tender the full amount of the entry tax with the interest thereon and all charges which have been incurred in demanding the entry tax in taking the steps necessary for sale, and thereupon the sale shall be stayed.

(4) A sum of money equal to 15 per cent of price of the motor vehicle shall be deposited by the bidder participating in the auction in the hands of the competent authority before the auction and when the reminder of the purchase money may not be paid immediately after the conclusion of auction the money so deposited shall be liable to forfeiture.

(5) The motor vehicle shall be paid for in ready money at the time of sale or as soon after as the officer holding the sale shall appoint and the purchaser shall not be permitted to carry away any part of the vehicle until he has paid for the same in full.

(6) Where the purchaser may fail in the payment of the purchase money, the motor vehicle shall be resold and the defaulting purchaser shall be liable for any loss arising as well as the expenses incurred on the resale. Where the motor vehicle may on the second sale, sell for a higher price than at the first sale difference of increase shall be the property of him on whose account the said first sale was made.

(iii) After Form XI, the Form XII and XIII as below shall be added.

Form XII

Demand notice for payment of tax under Tamil Nadu Entry of Motor Vehicles into Local Areas Act, 1990 (Tamil Nadu Act 13 of 1990).

(Rule 8-A)

To :

Thiru/Thirumathi ...................... TNGST RC No............ if held ............C.S.................T.C. No..................if held....

Whereas the amount of tax namely Rs........ (and the amount of penalty namely, Rs..........................................) which is due from you as per Section 3(1) of Tamil Nadu Entry of Motor Vehicles into Local Areas Act, 1990 for which the vehicle..........bearing Chassis No..................is impounded.

Whereas you have not remitted the Entry Tax of Rs.... (Rupees...) and penalty of Rs........(Rupees..................................) within the stipulated time. Notice is hereby given to sell the above impounded vehicle in public auction on.................at.............in the.............if no payment of tax penalty is remitted on or before................If no payment made within the above prescribed time, the Motor vehicle shall be disposed of in public auction and thereby the amount due Government will be reallised.

seal:

Place.......

Signature........

Date.........

Assessing Authority....

Form XIII

Notice for auction of the impounded vehicle under Tamil Nadu Entry of Motor Vehicles into Local Areas Act, 1990, (Tamil Nadu Act 13 of 1990) :

(Section 15-A)

To:

Thiru/Thirumathi ..................... TNGST RC. No............. if held ............C.S.................T.C. No..................if held........

Whereas the amount of tax namely Rs........ (and the amount of penalty namely, Rs.....................) which is due from you as per Section 3(1) of Tamil Nadu Entry of Motor Vehicles into Local Areas Act, 1990 for which the vehicle..........bearing Chassis No..................is impounded.

seal:

Place.......

Signature..................

Date.........

Assessing Authority.........

20. The Government of Tamil Nadu in G.o.Ps. No. 9 Commercial Taxes and Religious Endowments(C2) Department, dated 13th January 1997 issued a notification authorising certain officers of the Transport Department as Competent Authorities under the Principal Act which reads as under:

In exercise of the powers conferred by Section 15-A of the Tamil Nadu Tax on Entry of Motor Vehicles into local Areas Act, 1990 (Tamil Nadu Act 13 of 1990) Governor of Tamil Nadu hereby authorises the officers of the Transport Department not below the rank of Regional Transport Officer and Officers in the Traffic Wing of the Police Department not below the rank of Deputy Superintendent of Police to be the 'competent authority' under this section.

21. The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Ordinance. 1997, (Tamil Nadu Ordinance No.I of 1997) was repealed and in its place the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Act, 1997 (Act No. XIV of 11997) was enacted.

(a.) All Sections, except Clause (1) of Section 2 shall be deemed to have come into force on the 6th day of January. 1997 and Clause (1) of Section 2 shall be deemed to have come into force on the 1st day of April 1996.

(b.) The Language by which Section 3 and 4 were couched at different times may now be related in three columns as below for better understanding and easy comparison.

Prior to 1991 AmendmentAfter 1991 AmendmentAfter Ordinance No. 1 of 1997

Section 3Section 3Section 3LEVY OF TAX:

(1) Subject to the provisions of this Act, there shall be levied and collected a tax on the entry of any motor vehicle into any Local area for use or sale therein which is liable for registration in the date under the Motor Vehicles Act, 1988. The rate of tax shall be at such rate or rates as may be fixed by the Government by notification on the purchase value of the Motor vehicle but not exceeding the rates prescribed for motor vehicles in the first Schedule to the General Sales Tax Act.

Provided that not tax shall be levied and collected in respect of any motor vehicle which was registered in any Union Territory or any other State under the law relating to motor vehicle prior to a period of fifteen months or more from the date on which it is registered in the State.

Explanation: For the purpose of this proviso the expression 'law relating to motor vehicles' means the Motor Vehicles Act, 1993 or the Motor Vehicles Act, 1988, as the case may be

LEVY OF TAX:

(1) Subject to th provisions of this Act, there shall be levied and collected a tax on the entry of any motor vehicle into any local area for use or sale therein which is liable for registration in the State under the Motor Vehicles Act, 1988. The rate of tax shall be at such rate or rates not exceeding twenty per cent as any be fixed by the Government, by notification, on the purchase value of the vehicle.

Provided that not tax shall be levided and collected in respect of any motor vehicle which was registered in any Union territory or any other State under the law relating to motor vehicle prior to a period of fifteen months on more from the date on which it is registered in the State.

Explanation. For the purpose of this provis, the expression 'law relating to motor vehicles' means the Motor Vehicles Act, 1939 or the Motor Vehicles Act, 1988, as the case may be.

LEVY OF TAX:

(1) Subject to the provisions of thus Act, there shall be levied and collected a tax on the entry of any Motor Vehicle into any local area for use or sale therein which is liable for registration in the state under the Motor Vehicles Act, 1988. The rate of tax shall be

(i) Where the importer is a dealer in Motor Vehicles at such rate or rates not exceeding twenty per cent as may be fixed by the Government by notification on purchase value of the motor vehicle.

(ii) Where the importer is not a dealer in motor vehicles equal to the amount of tax that would have been payable under the General Sales Tax Act had the Vehicle been purchased in the State.

Provided that in respect of any motor vehicle which was registered in any Union Territory or any other State under the law relating to motor vehicle

(a) before the 10th September, 1996, no tax shall be levied and collected, if the owner of such vehicle applies for the assignment of a new registration mark in the state after a period of 15 months from the date of its registration.

(b) On or after the 10th September 1996, no tax shall be levied and collected, if the owner of such vehicle applies for the assignment of a new registration make in this State after a period of 18 months form the date of its registration.

Explanation - For the purpose of this proviso, the expression 'law relating to motor vehicle' means the Motor Vehicles Act, 1939 or the Motor Vehicles Act, 1988.

Section 4Section 4Section 4REDUCTION IN TAX LIABILITY:

(1) Where an importer of a motor vehicle liable to pay tax under this Act. Being a dealer in motor vehicles, becomes liable to pay tax under the General Sales Tax Act by virtue of the sales of such motor vehicle then his liability under the General Sales Tax Act shall be reduced to the extent of tax paid under this Act.

(2) Where an importer who, not being a dealer in motor vehicles, had purchased the motor vehicle for his own use in any Union Territory, or any other State, then his liability under the Act shall, subject to such condition, as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the law, relating to General Sales Tax, as may be in force in that Union

REDUCTION IN TAX LIABILITY:

(1) Where an importer of a motor vehicle liable to pay tax under this act, being a dealer in motor vehicles, becomes liable to pay tax under the General Sales Tax Act, additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act, 14 of 1970) and the surcharge and additional surcharge under the Tamil Nadu Sales Tax (Surcharge) Act, 1971. (Tamil Nadu Act 24 of 1971), by virture of the sale of such motor vehicle, then his liability under those Acts shall be reduced to the extent of tax paid under this Act.

(2) Where an importer, who, not being a dealer in motor vehicles, had purchased the motor vehicle for his won use in any Union Territory, or any other State then his liability under the Act shall subject to such conditions as may be prescribed, be reduced to the extent of the amount of tax paid, if nay, under the law relating to General, Sales Tax as may be in force in that Union

REDUCTION IN TAX LIABILITY:

(1) Where an importer of a motor vehicle liable to pay tax under this Act, being a dealer in motor vehicle, becomes liable to pay tax under the General Sales Tax Act, and additional sales tax under the Tamil Nadu Additional Sales Act, 1970 (Tamil Nadu Act 14 of 1970) by virtue of the sale of such motor vehicle then his liability under those Acts shall be reduced to the extent of tax paid under this Act.

(2) Where an importer who, not being a dealer in motor vehicles, had purchased the motor vehicle for his own use in any Union Territory, or any other State, then his liability under the Act shall, subject to such condition, as may be prescribed be reduced to the extent of the amount of tax paid, if anym under the law relating to General Sales Tax as may be in force in that Union territory or

22. Section 19 imposes certain restrictions on registration, The Section stands, as it was originally enacted, without undergoing any amendment. It reads as under:

19. Restriction on registration: Notwithstanding anything contained in any other law for the time being in force, where the liability to pay tax in respect of a motor vehicle arises under this Act and such motor vehicle is required to be registered in the State under the Motor Vehicles Act, 1988 (Central Act 59 of 1988) no registering officer shall register any such motor vehicle, unless payment of such tax has been made by the person concerned in respect of such vehicle.

23. In order to properly understand the efficacy and implications of the charging and other related provisions, it is but necessary to know the signal significance of the meaning of certain words and expressions figuring in various provisions of the Act as it stands now,

(a.) The definitions in Section 2, which explains the meanings of various words and expression, reads as under;

2. Definitions: In this Act, unless the context otherwise requires;

(a.) 'accessories' means the car air-conditioner, music system and any other article fitted to a motor vehicle and which is not included in the original invoice;

(b.) 'appellate authority' means an appellate authority appointed under Section 5;

(c.) ' Assessing authority' means an assessing authority appointed under Section 5;

(d.) ' Entry of motor vehicle into a local area' with all its grammatical variations and cognate expression, means entry of motor vehicle into a local area from any place outside the State for use or sale therein;

(e.)' General Sales Tax Act means the Tamil Nadu General Sales Tax Act, 1959, (Tamil Nadu Act I of 1959);

(f.) 'Government' means the State Government;

(g. )' importer' means a person who brings a motor vehicle into a local area from any place outside the State for use or sale therein; and who owns the vehicle at the time of its entry into the local area;

(h.) 'local area' means the area within the limits of;

(i.) the City if Madras as defined in the Madras City Municipal Corporation Act. 1919 (Tamil Nadu IV of 1919) or

(ii.) the City of Madurai. as defined in theMadurai City Municipal Corporation Act. 1971 (Tamil Nadu Act 15 of 1971) or

(iii.) the city of Coimbatore as defined in the Coimbatore City Municipal Corporation Act, 1981 (Tamil Nadu Act 25 of 1981) or

(iv.) any other Municipal Corporation that may be constituted under any law for the time being in force; or

(v.) a municipality under the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920), or

(vi.) a township under the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920), or the (Tamil Nadu Panchayats Act, 195 8) or the Mcltur Township Act, 1940 (Tamil Nadu Act, XI 1940) or the Courtallam Township Act, 1954. (Tamil Nadu Act, XVI of 1954), or the Bhavanisagar Township Act, 1954 (Tamil Nadu Act XXV of 1954), or under any other law for the time being in force, or

(vii.) a panchayat under the Tamil Nadu Panchayats Act, 1958 (Tamil Nadu Act XXXV of 1958);

(i). 'motor vehicle' means a motor vehicle as defined in clause (28) of Section 2 of the Motor Vehicles Acl, 1988 (Central Act 59 of 1988);

(j.) 'person' includes any company or association or body of individuals whether incorporated or not and also a Hindu undivided family, a firm, a local authority, the Government of any other Stale or Union Territory;

(k.) 'purchase value' means the value of a motor vehicle as ascertained from original invoice and includes the value of accessories fitted to the vehicle, insurance, excise duties, countervailing duties, sales tax, trans- port fee, freight charges and all other charges incidentally levied on the purchase of a motor vehicle;

Provided that, where purchase value of a motor vehicle is not acertainable on account of non-availability or non-production of a original invoice or when the invoice produced is proved to be false or if the motor vehicle is acquired or obtained otherwise than by way of purchase, then the purchase value shall he the value or price at which motor vehicle of like kind or quality is sold or is capable of being sold, in open market;

(1.) 'Stale' means the Slate of Tamil Nadu;

(m.) words and expressions used but not defined in this Act shall have the meanings assigned to them under the General Sales Tax Act.

24. It is not as if the Stale of Tamil Nadu alone passed Legislation on Entry Tax. The plain fact is that even so many States Bihar, Maharashtra, Karnataka and a host of other States passed such a Legislation, the validity of which had already been challenged in superior courts of jurisdiction High Courts and the Apex Court and decisions emerged on almost on all the grounds, as now urged in these actions.

25. For instance, the validity of the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale therein Act, 1993 (Act No. XVI of 1993) enacted on the basis of Legislative field in Entry No. 52 of List II of the Seventh Schedule to the Constitution had been challenged before a Division Bench, consisting of K. Venkataswami, C.J. (as he then was) and A.K. Ganguly, J., of the High Court of Patna in the case of Bihar Chamber of Commerce v. State : AIR1995Pat144 on many a ground, inclusive of the grounds relatable to (i) Legislative competence; (ii) Colourable piece of Legislation; (iii) Violation of rights under Articles 301 and 304 of the Constitution; and (iv) Violation of Article 14 of the Constitution.

26. The said Division Bench, after referring to catena of precedents emerging form the Apex Court and other superior Courts of jurisdiction Indian and foreign -- negatived the contention relatable to Legislative incompetence and colourable piece of Legislation. The Bench, however, ultimately held in paragraphs 72 and 72-A {at pages 161-162), which gets reflected as below;

72. For the reason aforesaid, these write petitions succeed to the extent that this Court declares that the provisions of the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or sale therein Act, 1993 does not satisfy the requirement under Articles 301 read with Article 304(b). of the Constitution and Section 3 of the said Act is ultra vires Articles 301 and 304(b). of the Constitution of India. This Court further declares that Provision to Section 3 and the provisions of Section 6 of the Act, are ultra vires Article 14 of the Constitution of India. The Respondent-State of Bihar, be restrained from enforcing the provisions of the said Act any further.

72-A Let appropriate Write issue. There shall be no order as to costs.

27. The aggrieved State of Bihar Filed Special Leave Petition (C) Nos. 14636-14644 of 1995 against the said judgment. The ITC Limited, one of the write petitioners before the High Court, filed Special Leave Petition(C) No. 23172 of 1995 challenging the correctness of the judgment of the High Court, insofar as it has negatived its contentions concerning the validity of the said Act. Special Leave Petition (C) No. 23303 of 1995 had been preferred by Vazir Sultan Tobacco Industries Limited and another.

28. The operative portion of the judgment of the Apex Court gets reflected in paragraphs 40 and 41 (at page 2358), which reads as under:

'40. For the above reasons, the appeals arising from Special Leave Petition (C) Nos. 1463644644 of 1995 (preferred by the State of Bihar) are allowed and the judgment of the High Court is set aside. The appeals arising from Special Leave Petition(C) No. 23172 of 1995 (preferred by ITC Limited & Ors) and Special Leave Petition (C) No. 23303 of 1995 (preferred by V.S.T. Industries & Anr.) are dismissed'.

41. No order as to costs.

(Vide State of Bihar v. Bihar Chamber of Commerce : [1996]2SCR184 ).

29. The resultant position is that the challenge done on the ground of Legislative incompetence and colourable piece of Legislation, as negatived by the High Court of Patna got the seal of approval of the apex Court. This apart, to the challenges thrown on the ground of violation of Articles 301, 304(b) and 14 of the Constitution of India, which found favour with the High Court of Patna, were not in fact, countenanced by the Apex Court and to put it differently, the findings of the High Court of Patna, on those aspects were reversed. To sum up, the questioning of the impugned Legislation was upheld on all grounds by the Apex Court.

30. In view of the decision, as above, the fact of finding solution to most of the questions raised may be performed, with ease and grace, and without any difficulty whatever. What we have to do is to simply tread on the path chosen by the superior courts of jurisdiction.

31. We may now proceed to consider the various topics one by one.

(I. Legislative Competence:)

32. The Apex Court in the case of Bihar Chamber of Commerce : [1996]2SCR184 . framed Question No. 4 relatable to Legislative competence, which reads as under:

'Question No. 4 Whether the impugned enactment is outside the purview of entry 52 in List-II of the Seventh Schedule to the Constitution and therefore beyond the legislative competence of the Bihar Legislature for the reason that it does not provide for the revenues raised thereunder to be passed on to the local authorities for being used for the purposes of such local authorities.'

33. The answer to such a question is traceable to paragraphs 33 to 37 (pages 2356-2357) which reads as under:

33. The next submission of Shri Ganesh is that inasmuch as the impugned Bihar Act does not contain any provision or any indication that the taxes collected under the Act will be passed on to the local authorities, it cannot be said to be a tax contemplated by Entry 52 in List -II. Counsel submitted, on the basis of certain decision of this Court to which we shall presently refer, that the said tax is essentially in the nature of Octroi which was being levied by the local authorities prior to the Government of India Act, 1935, Octroi was levied by the local authorities to raise money for their own purposes, it was meant to meet the financial needs of the local authorities and not for supplementing argumenting the general finances of the State. The impugned Bihar Act, however, seeks to do precisely that which is not contemplated by Entry 52. It has levied to the impugned tax for the purpose of supplementing and augmenting the finances of the State and to the finances of the local authorities and hence, outside the purview of Entry 52 in List- II, says Shri. Ganesh.

34. Shri. Ganesh relied upon the Following decision:

In Central India spinning and Weaving & manufacturing Co., Ltd. The Empress Mills. Nagpur v. The Municipal Committee. Wardha : [1958]1SCR1102 , this Court observed 'The Legislative history of this tax thus shows that octroi was leviable on the entry of goods in a local area when the goods were for consumption, use or sale therein... In the absence of clear intention to the contrary, the incidence of the tax leviable under item 8 of Schedule II of the Schedule Tax Rules is incapable of having a different complexion from that which it had before 1920 or that which was clearly given after 1935.35. In Diamond Sugar Mills Ltd., v. State of Uttar Pradesh : [1961]3SCR242 , the Court referred to the previous Legislative history including the position obtaining under the Government of India Act, 1919. Notification No. 311/8/dated December 18, 1920 and Entry 49 of List-II of the Government of India Act, 1935 and observed : 'It was with the knowledge of the pervious history of the Legislation that the Constitution makers set about their task in preparing the lists in the seventh schedule. There can be little doubt therefore that in using the words 'tax on the entry of goods into a local area for consumption use or sale therein, they wanted to express by the words 'local area' primarily area in respect of which an octroi was leviable under item 7 of the Schedule Tax Rules, 1920-that is, the area administered by a local authority such as municipality, a district Board, a local Board or a Union Board, a panchayat or some body constituted under the law for the Governance of the local affairs of any part of the State...

36. In Burma Shell Oil Storage Distributing Company India Ltd. v. The Belgaum Borough Municipality : AIR1963SC906 , this Court again traced Legislative history of octroi and terminal taxes and held that octroi was always understood as a tax leviable on the entry of goods into a local area for consumption, use or sale therein.

37. We find it difficult to agree with the submission of Shri Ganesh Entry 49 List-II of the Seventh Schedule to the Government of India Act, 1935 as well as Entry 52 in List -II in our constitution speak of 'local areas' and not 'local authorities. The tax by whatever name called, is levied upon the entry of goods into a local area for consumption use or sale therein. The decisions relied upon by Shri Ganesh too use the same words. Entry 52 empowers the State Legislature to levy this tax. The local authorities cannot themselves levy this tax. The power is that of the State Legislature and of none else. So long as the tax is levied upon the entry of goods into a local area for the purpose of consumption, use or sale therein, the requirement of Entry 52 is satisfied. The character of the tax so levied is that of entry tax-by whatever name it is called. The decisions relied upon by Shri Ganesh do not say that the State must levy the tax and make over the collection part of it to local authorities nor do they say that after collecting it, the Slate must make over the proceeds to the local authorities, The Highest that Shri Ganesh can legitimately put his submission is that the tax is meant for and must be utilised for the purpose of the local areas. It cannot further be stipulated that utilisation should be through or by the concerned local authorities. In our opinion, the relevant requirement is satisfied in this case. As stated herein before, the entire State of Bihar is divided into local areas. From the point of view of the entry tax, one may say that the State is compendium of local areas. Spending for the purposes of the State is thus spending for the purposes of local areas. Situation may perhaps be different where the local areas are confined to a few cities or towns in the State. But where the local areas span the entire State, it cannot be argued that money spent for welfare schemes for improvement of roads, rivers and other means of transport and communication is not spent on or for the purposes of local areas. The purpose and needs of local areas are no different from the purposes and needs the State-not at any rate to any appreciable degree. In this context, it is relevant to notice that the Maharashtra Entry Tax Act considered by this Court in Sakthi Kumat. 1995 (96) S.T.C. 659. was also meant for augmenting the general revenues of state, to wit, to make up the loss of revenue the State was suffering on account of reduction of sales tax on motor vehicle in the adjoining States. The following observations in the said decision tend to support our reasoning, though, it is true, this particular question was not raised therein;'A very perusal of these objects and reasons would indicate that this legislation was brought in order to compensate loss of revenues by consumers who avoid of payment of the sales tax or purchase tax on the vehicle payable in the State by purchasing it in another State where the rate was lesser than the State of Maharashtra and then, to bring the vehicle inside the State. The Legislature therefore clearly intended to avoid any loss of legitimate sales tax revenue by the Stale. But the levy cannot be held to be bad because the Legislature intended to avoid any loss of sales in the State so long it is not found to be invalid either because of any constitutional or statutory violation. It is not by intention or propriety of a Legislation but it is legality or illegality which renders it valid or invalid.'

34. What the Apex Court said, as above, is on all force applicable to the impugned Tamil Legislation inasmuch as the said Legislation is similar or almost identical to Bihar Act on Entry Tax. We have made ad survey of the provisions of the impugned Tamil Nadu Legislation in the preceding paragraphs and such survey will reveal its scheme fluidly crystal clear. The entire State of Bihar is divided into local area. Just like that the entire State of Tamil Nadu is also divided into local area. Thus the State of Tamil Nadu is a compendium of local area. Spending for the purposes of the State is thus spending for the purposes of local areas. Situation may perhaps be different. where the local areas are confined to a few cities or towns in the State. But, where the local areas under the relevant provisions .as already indicated, span the entire State of Tamil Nadu, it cannot at all be argued that money spent for welfare schemes for improvement of roads, rivers and other means of transport and communication is not spent on or for the purposes of local areas. The purposes and needs of local areas are no different from the purposes and needs of the State.

35. This apart, we may point out that Entry No. 52 empowers the State Legislature to levy Entry Tax. The local authorities cannot by themselves levy this tax. The power is that of the State Legislature and none else. So long as the tax is levied upon the entry of goods into a local area for the purpose of consumption, use or sale therein the requirement of Entry No. 52 is satisfied. The character of the tax so levied is that of entry tax-by whatever name it is called. The fact that the State does not make over the collection part of it to local authorities is of no consequence, when especially spending for the purposes of the State is spending for the purposes of local areas.

36. No doubt true it is, that the object of the impugned Legislation would indicate that this Legislation was brought in order to compensate the loss of revenue by consumers, who avoid payment of purchase tax on vehicles, payable in the State, by purchasing in another State, where the rate was reduced or lesser that the one imposed by the State and then bring the vehicle inside that State. But, the levy cannot be held to be bad. because the Legislation of Tamil Nadu intended to avoid any loss of sales tax in this State, so long as it is not found to be invalid either because of any constitutional or statutory violation. It is not by the intention or propriety of a Legislation, but legalilty or illegality, which renders it valid or invalid, as pointed out by the Apex Court of this country.

37. This Court is therefore unable to hold that the impugned Legislation of this State was suffering from Legislative incompetence in enacting the impugned Legislation. Therefore, the question arising under this topic is accordingly answered.

II Colourable Piece Of Legislation:

38. The impugned Legislation has been assailed as a piece of colourable Legislation. The doctrine of colourable Legislation has been very lucidly dealt with in many a decision emerging from the apex Court of this country. A few among them, we may profitably refer to herein, for a proper understanding of the implications of such a concept.

(a) In K.C.G. Narayan Deo v. State of Orissa : [1954]1SCR1 from Orisa : AIR1953Ori185 what their Lordships of the Supreme court said in paragraph 9 (page 379) is relevant and it reads as under:

(9) It may be made clear at the outset that the doctrine of colourable legislation docs not involve any question of 'bona fides' or mala fides' on the part of the legislature. The whole doctrine revolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power. Vide Cooley's Constitutional Limitations. Vol. 1, P.379. A distinction, however, exists between a legislature which is legally omnipotent like the British Parliament and the laws promulgated by which could not be challenged on the ground of incompetency, and a legislature which enjoys only a limited or a qualified jurisdiction.

If the Constitution of a State distributes the legislative powers amongst different bodies which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is this latter class of cases that the expression 'colourable legislation' has been applied in certain judicial pronouncements. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet, in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination to be a mere pretence or disguise. As was said by Duff. J., in Attorney General for Ontrario v. Reciprocal Insureres 1924 A.C. 328 .

Where the law making authority is of a limited or qualified character it may be necessary to examine with same strictness the substance of the legislation for the purpose of determining what is that the legislature is really doing.

In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject mater in substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation. The legislature cannot violate the constitutional prohibitions by employing an indirect method. In cases like these, the enquiry must always be as to the true nature and character of the challenged legislation and it is the result of such investigation and not the form alone that will determine as to whether or not it relates to a subject which is within the power of the legislative authority-vide Attorney General for Ontrario v. Reciprocal Insureres 1924 A.C. 323. For the purpose of this investigation the court could certainly examine the effect of the legislation and take into consideration its object, purpose or design - vide Attorney General For Alberta v. Attorney General for Canada 1939 A.C. 117. But these are only relevant for the purpose of ascertaining the true character and substance of the enactment and the class of subjects legislation to which it really belongs and not for finding out the motives which induced the legislature to exercise its powers.

It is said by Lefory in his well known work on Canadian Constitution that even if the legislature avow on the face of an Act that it intends thereby to legislate in reference to a subject over which it has no jurisdiction, yet if the enacting clauses of the Act bring the legislation within its powers, the Act cannot be considered 'ultra vires'. See Lefrroy on Canadian Constitution, page 75.

(b) In G.K. Krishnan v. State of Tamil Nadu : [1975]2SCR715 what their Lordships of the Supreme Court said in paragraph 9 (at page 586) is as below:

9. As the State legislature was competent to pass the Act and as the Government is authorised under Section 4 to levy the tax, the question of the motive with which the tax was imposed is immaterial. To put it differently, there can be no plea of a colourable exercise of power to tax if the Government had power to impose the tax and the fact that the imposition of the tax was for the purpose of eliminating competition would not detract from its validity. If an authority has power to impose a tax, the fact that it gave a wrong reason for exercising the power would not derogate from the validity of the tax. Therefore, there is no substance in the first contention.(C) In R.S. Josht v. Ajit Mills : [1978]1SCR338 . what their Lordships of the Supreme Court said in the relevant portion of paragraph 16 (at page 2286). which is quite relevant for us, is as below:

16.....We may dispose of the contention which has appealed to the High Court based on 'colourable device'. Certainly, this is a malignant expression and when flung with fatal effect at a representative instrumentality like the Legislature, deserves serious reflection. If, forgetting comity, the Legislative wing charges the Judicative wing with colourable judgments, it will be intolerably subversive of the rule of law. Therefore, we too must restrain ourselves from making this charge except in absolutely plain cases and pause to understand the import of the doctrine of colourable exercise of public power, especially legislative power. In this branch of law, 'colourable' is not 'tainted with bad faith or evil motive', it is not pejorative or crooked. Conceptually, 'colourability' is bound up with incompetency. 'Colour', according to Black's Legal Dictionary is 'an appearance, semblance or simulacrum, as distinguished from that which is real... a deceptive appearance... a lack of reality*. A thing is colourable which is in appearance only and not in reality, what it purports to be. In Indian terms, it is maya. In the jurisprudence of power, colourable exercise of or fraud on legislative power or more frightfully, fraud on the Constitution, are expressions which merely mean that the legislature is incompetent to enact a particular law, although the label of competency is struck on it, and then it is colourable legislation. It is very important to notice that if the legislature is competent to pass the particular law, the motives which impel it to pass the law are really irrelevant. To put it more relevantly to the case on hand, if a legislation, apparently enacted under one Entry in the List, falls in plain truth and fact, within the content, not of that Entry, but of one assigned to another legislature, it can be struck down as colourable even if the motive were most commendable. In other words, the letter of the law notwithstanding, what is the pith and substance of the Act. Does it fall within any entry assigned to that legislature in pith and substance or, as covered by the ancillary power implied in that Entry? Can the legislation be read down reasonably to bring it within the legislature's constitutional powers. If these questions can be answered affirmatively, the law is valid. Malice or motive is, beside the point, and it is not permissible to suggest Parliamentary incompetence on the score of mala fides.(d) In Shashikant Laxman Kale v. Union of India : [1990]185ITR104(SC) the Supreme Court said in paragraph 16 (at page 2119), which reads as under:16. For determining the purpose or object of the legislation, it is permissible to look into the circumstances which prevailed at the time when the law was passed and which necessitated the passing of that law. For the limited purpose of appreciating the background and the antecedent factual matrix leading to the legislation, it is permissible to look into the Statement of Objects and Reasons of the Bill which actuated the step to provide a remedy for the then existing malady. In A. Thangal Kunju Madaliar v. M. Venkitachalam Pottai : [1956]29ITR349(SC) the Statement of Objects and Reasons was used for judging the reasonableness of a classification made in an enactment to see if it infringed or was contrary to the constitution. In that decision for determining the question, even affidavit on behalf of the State of 'the circumstances which prevailed at the time when the law there under consideration had been passed and which necessitated the passing of that law was relied on. It was reiterated in State of West Bengal v. Union of India : [1964]1SCR371 -- that the Statement and Objects and Reasons accompanying a Bill, when introduced in Parliament can be used for the limited purpose of understanding the background and the antecedent state of affairs leading up to the legislation. Similarly, in Pannalal Binjaraj v. Union of India : [1957]1SCR233 a challenge to the validity of classification was repelled placing reliance on an affidavit filed on behalf of the Central Board of Revenue disclosing the true object of enacting the impugned provision in the Income Tax Act.

39. The facts of the instant case are plain. The professed object, as stated earlier, is clear. The motive of the Legislation is irrelevant to castigate an Act as a colourable device. Further it cannot be said that the Legislature in question has not authority to impose the tax in question. Therefore, applying the aforesaid principles, this Court cannot hold that the impugned Legislation is a colourable one. The question under this topic is thus answered.

III. Violation of Rights Under Articles 301 and 304 of The Constitution.

IV, Absence of Prior Approval of The President of India Under Proviso

To Article 304(b) of The Constitution.

and

V Nature of The Tax Levided Under The Impugned Legislation.

40. The questions that may arise for discussion and consequent decision on the topics, as stated above, are inter-related in such a way that any independent discussion and decision will be likely to result in jarring repetition of ideas and in order to avoid such a situation, we rather feel, better it is-to have all these three topics, grouped together, for a compendious discussion and decision.

41. The grievance of the petitioners, in all these present actions is that the levy and collection of Entry Tax on motor vehicles under the situations contemplated by the impugned Legislation impedes the free-flow of trade, commerce and intercourse throughout the territory of India. In such a situation, it is but necessary to satisfy the requirements contained in Part XIII of the Constitution.

42. The title for Part XIII is. Trade, Commerce and Intercourse within the Territory of India'. The relevant Articles in that part are Articles 301, 302, 303 and 304. We may reproduce them here.

(a) 301. Freedom of Trade, Commerce and Intercourse -- Subject to the other provisions of this Part, trade, commerce and Intercourse throughout the territory of India shall be free.

(b) 302. Power of Parliament to impose restrictions on Trade. Commerce and Intercourse - Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.

(c) 303. Restrictions on the Legislative Powers of the Union and of the States with regard to trade and Commerce - (1) Notwithstanding anything in Article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.

(2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of any preference or making, or, or authorising the making of any discrimination, if it is declared by such law that it is necessary to do so far the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India,

(d) 304. Restrictions on Trade Commerce and Intercourse Among States - Notwithstanding anything in Article 310 or Article 303, the Legislature of a State may be law-

(a) impose on goods imported from another States or the Union territories any tax lo which similar goods manufactured or produced in that State arc subject, so however, as not to discriminate between goods so im- ported and goods so manufactured or produced: and

(b) impose such reasonable restriction on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest.

Provided that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

43. Precedents emerging from the Apex Court in regard to interpretation of this Part of the Constitution is abundant. We shall presently refer to some of them.

(a) In Ataibari Tea Co. v. The State of Assam : [1961]1SCR809 , a Constitution Bench of the Apex Court was testing the validity of the provisions of the Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954 by applying the provisions of this part of the Constitution. At page 830 (of SCR) = (at page 241-242 of AIR) Sinha, C.J. stated:-

Article 301, with which Part XIII commences, contains the crucial words 'shall be free' and provides the key to the solution of the problems posed by the whole Part. The freedom declared by this Article is not an absolute freedom from all legislation. As already indicated, the several entries in the three Lists would suggest that both Parliament and State Legislatures have been given the power to legislate in respect of trade, commerce and intercourse, but it is equally clear that legislation should not have the effect of putting impediments in the way of the free flow of trade and commerce. In my opinion, it is equally clear that the freedom envisaged, by the Article is not an absolute freedom from the incidence of taxation in respect of trade, commerce and intercouse as shown by entries 89 and 92A in the List 1, entries 52, 54 and 56 to 60 in List II and entry 35 in List III. All these entries in terms speak of taxation in relation to different aspects of trade, commerce and intercourse. The Union and State Legislature, therefore, have the power to legislate, by way of taxation in respect of trade, commerce and intercourse, so as not to erect trade barriers, tariff walls or imposts, which have a deleterious effect on the free flow of trade, commerce and intercourse. That freedom has further been circumscribed by the power vested in Parliament or in the Legislature of a State to impose restrictions in public interest. Parliament has further been authorised to legislate in the way of giving preference of making discrimination in certain strictly limited circumstances indicated in clause (2) of Article 303. Thus, on a fair constructions of the provisions of Part XIII. the following propositions emerge:

(1) trade, commerce and intercourse throughout the territory of India are not absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a Stale.

(2) the freedom declared by Article 301 does not mean freedom from taxation simpliciter, but does mean freedom from taxation which has the effect of directly impeding the free flow of trade, commerce and intercourse.

(3) the freedom envisaged in Article 301 is subject to non discriminatory restrictions imposed by Parliament in public interest (Article 302).

(4) even discriminatory or preferential legislation may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (Article 302(2);

(5) reasonable restrictions may be imposed by the Legislature of a State in the public interest (Article 304(b);

(6) non-discriminatory taxes may be imposed by the legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced or manufactured in the State (Article 304(a) and lastly

(7) restrictions imposed by existing laws have been continued except insofar as the President may be order otherwise direct (Article 305). Gajendragadkar, J., as he then was, at page 843 (of 1961 SCR) (at p247 of 1961 AIR) observed:

'In drafting the relevant Articles of Part XIII, the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal polity which had been adopted by the Constitution for the governance of the country. Political freedom which had been won, and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity. It was realised that in course of time, different political parties believing in different economic theories or idealogies may come in power in the several constituent units of the Union, and that may conceivably give rise to local and regional pulls and pressures in economic matters. Local or regional fears or apprehensions raised by local or regional problems may persuade the State legislatures to adopt remedial measures intended solely for the protection of the regional interests without due regard to their effect on the economy of the nation as a whole. The object of Part XIII was to avoid such a possibility. Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustaining and improving living standards of the country. The provisions contained in Article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of declaratory character; it is not also a mere statement of a Directive Principle of State Policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country...'(b) Then came the case of the Automobile Transport (Rajasthan) Limited v. The State of Rajasthan : [1963]1SCR491 Das, J., who spoke for the Constitution Bench, referred to the views expressed in Tiabari Tea Company's Company : [1961]1SCR809 and proceeded to say.

'We have tried to summarise above the various stand points and views which were canvassed before us and we shall now proceed to consider which according to us, is the correct interpretation of the relevant Articles in Part XIII of the Constitution. We may first take the widest view, the view expressed by Shah, J., in the Attabari Tea Company's case, : [1961]1SCR809 a view which has been supported by the appellants and one or two of the intervencrs before us. This view we apprehend, is based on a purely textual interpretation of the relevant Articles in Part XIII of the Constitution and this textual interpretation proceeds in the following way. Article 301 which is in general terms and is made subject to the other provisions of Part XIII imposes a general limitation on the exercise of legislative powers, whether by the Union or the States, under any of the topics -taxation topics as well as other topics - enumerated in the three Lists of the Seventh Schedule, in order to make certain 'trade, commerce and intercourse throughout the territory of India shall be free'. Having placed a general limitation on the exercise of legislative powers by Parliament and the State Legislatures, Article 302 relaxes that restriction in favour of Parliament by providing that that authority may by law impose such restrictions on the freedom of trade, commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interest'. Having relaxed the restriction in respect of Parliament under Article 302, a restrictions is put up on the relaxation by Art, 303(1) to the effect that Parliament shall not have the power to make any law giving any preference to any one State over another or discriminate between one State and another by virtue of any entry relating to trade and commerce in Lists I and III of the Seventh Schedule. Articles 303(1) which places a ban on Parliament against the giving of preferences to one Slate over another or of discriminating between one Stale and another, also provides that the same kind of ban should be placed upon the State Legislature also legislating by virtue of any entry relating to trade and commerce in Lists II and III of the Seventh Schedule. Article 303(2) again carves out an exception to the restriction placed by Article 303(1) on the powers of Parliament by providing that nothing in Article 303(a) shall prevent Parliament from making any law giving preference to one Slate over another or discriminating between one State and another, if it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India, This exception applies only to Parliament and not to the State Legislatures. Articles 304 comprises two clauses and each clause operates as a proviso to Articles 301 and 303. Clause (a) of that Article provides that the Legislature of a State may impose on goods imported from other State any tax to which similar goods manufactured or produced in that State arc subject so, however, as not to discriminate between goods so imported and goods so manufactured or produced. This clause, therefore, permits the levy on goods from sister States any tax which similar goods manufactured or produced in that State are subject to under its taxing laws, in other words, goods imported from sister States are placed on par with similar goods manufactured or produced inside the State in regard to State taxation within the State allocated field. Thus the States in India have full powers of imposing what in American State Legislation is called the use tax, . gross receipts lax etc. not to speak of the familiar property tax, subject only to the condition that such tax is imposed on all goods of the same kind produced or manufactured in the taxing State, although such taxation is undoubtedly calculated to fetter inter-State trade and commerce.... Now Clause (b) of Art 304 provides that notwithstanding anything in Article 301 or 303 the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. The proviso to cl(b) shall be that no bill or amendment for the purpose of Clause (b) shall be introduced or moved in the Legislature of a Slate without the previous .sanction of the President. This provision appears to be the State analogue to the Union Parliament's authority defined by Art 302, inspite of the omission of the word 'reasonable' before the word 'restrictions' in the latter Article. Leaving aside the pre--requisite of previous Presidential sanction for the validity of State Legislation under Clause (b) provided in the proviso thereto, there are two important differences between Arts. 302 and 304(b) which require special mention. The first is that while the power of Parliament under Art 302 is subject to the prohibition of preferences and discriminations decreed by Art 303(1) unless parliament makes the declaration contained in Article 303(2), the State's power contained in Article 304(b) is made expressly free from the prohibition contained in Article 303(1), because the opening words of Art 304 contain a non-obstante clause both to Article 301 and Art 303. The second difference springs from the fact that while Parliament's power to impose restrictions under Art 302 upon freedom of commerce in the public interest is not subject to the requirement of reasonableness, the power of the State to impose restrictions on the freedom of commerce in the public interest under Article 304 is subject to the condition that they arc reasonable.'(c) The next authority, to which may now refer, is the case of State of Madras v. N.K. Nataraja 1868 (3) SCR 829 : AIR 1969 SC 147 Mudaliar Shah, J., as he then was referred to Part XIII of the Constitution at page 839 (of SCR): (at p.154 of AIR) At page 841 (of SCR): (at p. 155 of AIR). Learned Judge proceeded to say:-

'Tax under the Central Sales Tax Act on inter-State sales, it must be noticed, is in its essence a tax which encumbers movement of trade or commerce, since by the definition in S. 3 of the Act a sale or purchase of goods is deemed to take place in the course of inter-State trade or commerce, if it-(a) occasions the movement of goods from one State to another (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. The question which then falls to be determined is whether the tax imposed in the present case is saved by the operation of the other provisions of Part XIII. Article 302 of the Constitution provides that Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Thereby, the Parliament is, notwithstanding the protection conferred by Article 301 authorised to impose restrictions on the freedom of trade, commerce or intercourse in the public interest. The expression 'between one State and another' does not imply that it is only intended to confer upon the Union Parliament the power to remove the fetter upon legislative authority only so as to keep trade, commerce or intercourse free between one State Government and another. It is intended to declare trade, commerce and intercourse free between residents in one State and residents in another State. That is clear because Article 302 expressly provides that on the freedom of trade restrictions may be imposed not only as between one State and another, but also within any part of the territory of India. As we have already observed Article 301 does not merely protect inter-State trade or operate against inter-State barriers: all trade is protected whether it is inter- Stale or Inter-State by the prohibition imposed by Article 301, and there is nothing in the language or the context for restricting the power of the Parliament which it otherwise possesses in the public interest to impose restrictions on the freedom of trade, commerce or intercourse, operative only as between one State and another as two entities there is also no doubt that exercise of the power to tax may normally be presumed to be in the public interest....(d) Worthwhile it is to refer to the observations made by Hedge, J., at page 855 (of SCR) (at 163 of AIR) Learned Judge observed with reference to Section 8(5) of the Central Sales Tax Act as follows:

Sub-section (5) of Section 8 provides for giving individual exemptions in public interest. Such a power is there in all taxation measures. It is to provide for unforeseen contingencies. Take for example, when there was famine in Bihar, if a dealer in Punjab had undertaken to sell goods to a charitable society in that State at a reasonable price for distribution to those who were starving, it would have been in public interest if the Punjab Government had exempted that dealer from paying sales tax. Such a power cannot immediately or directly affect the free flow of trade. The power in question cannot be said to be bad. If there is any misuse of that power, the same can be challenged.(e) It is but necessary to refer to, at this juncture, a recent decision emerging from the Apex Court in the case of Bihar Chamber of Commerce : [1996]2SCR184 , wherein His Lordship B.P. Jeevan Reddy, J. speaking for the Bench consisting of himself and Suhas C. Sen J. referred to earlier precedents and made a scintillating discussion in a lucid fashion as respects the true purpose of the provisions contained in Part XIII of the constitution, while entering into the arena of discussion relatable to point Nos. 1 and 2 therein in paragraphs 9 to 23 (at pages 2348 to 2353), which get reflected as below:

9. Question No.l: Whether the impugned tax has been established to be compensatory or whether it can be treated as a regulatory measure:

Article 301 declares that subject to the other provisions in part XIII, trade, commerce and intercourse throughout the territory of India shall be free. Certain exceptions are provided to the said Rule by part XIII itself, one of them being clause (b) of Article 304.10-11. This Court has held that tax laws are not outside the purview of Article 301 and that taxes which directly and immediately restrict trade and interfere with the flow of trade and commerce do offend Article 301. Similarly, non-fiscal measures which have the above effect arc equally hit by Article 301. It has, however, been held by a seven Judge Constitution Bench of this Court in Automobile Transport (Rajasthan) Limited v. State of Rajasthan : [1963]1SCR491 that 'regulatory measure or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301 and such measures need not comply with the requirements of the proviso to Article 304(b) of the Constitution'. It is held that regulatory measures do not really impede imide the trade, commerce or intercourse but rather facilitate it. Similarly, it is held that compensatory taxes for the use of trading facilities are outside the purview of Article 301. Since the impugned Act is not a regulatory measure but a taxing enactment and the tax is levied upon the entry of goods into a local area, i.e. upon the movement of goods, the question is whether the impugned tax is compensatory in nature for the use of trading facilities provided by the State. The High Court has observed that the State has failed to adduce any material to establish the compensatory nature of the tax. The only averment in the counter-affidavit filed in the High Court is the following one (counter-affidavit filed by Sri Binoy Krishnan, Deputy Commissioner, Commercial Taxes, Bihar): 'the Entry Tax Ordinance was thought to be promulgated in view of the loss of revenue on cess due to the decision rendered by the Hon'ble Supreme Court in the case of India Cement Ltd. as well as several decisions of the Hon'ble Patna High Court following the decision. The learned Additional Solicitor General, however, contended that the following indisputable facts do establish the compensatory nature of the tax, viz., the entire State of Bihar is divided into local areas of one or the other kind and that the Government and the local authorities do provide several trading facilities to promote trade and commerce with and within the State in the form of laying and maintenance of roads, establishment and maintenance of markets, establishment and operation of market yards for agricultural commodities and a host of other facilities. He submitted that the impugned tax will naturally help in providing the above facilities, and, therefore, it must be held to be compensatory. He requested in to take notice of these undeniable facts and to hold, on that basis, that the impugned lax is compensatory. The learned Additional Solicitor General further submitted that when the entire State is divided into local areas - when no part of the State is left uncovered by a local area and when the impugned tax is levied for the purposes of the State including the welfare schemes being undertaken by it, the tax cannot, but be compensatory in nature. The impugned tax will help the State in providing and improving the trading facilities since the interest of the State lies in promoting trade and commerce in goods and commodities with and within the State of Bihar. Reliance is placed upon the following observations Automobile Transport (Rajasthan) Limited : [1963]1SCR491 which read:

Licensing system with compensatory fees would not be restrictions but regulatory provisions: for without it, such as roads, water-ways cannot effectively be maintained and the freedom declared may in practice turn out to be an empty one. So, too, regulations providing for necessary services to enable the free movement of traffic, whether charged or not. cannot also be described as restrictions impeding the freedom.12. It is not possible to deny the force of this submission. Where the local areas contemplated by the Act cover the entire State, the distinction between the State and the local areas practically disappears. (The situation would, no doubt, be different if the local areas are confined to a few cities or towns in the State and the levy is upon the entry of goods into those local areas alone, This is an important distinction which should be kept in mind while appreciating this aspect and also while examining the decisions of this Court rendered in (fifties and sixties). The facilities provided in the State are the facilities provided in the local areas as well, interests of the State and the interests of the local authorities arc, in essence, no different. It is not and it cannot be stipulated that for the purpose of establishing the compensatory character of the tax, it is necessary to establish that every rupee collected on account of the entry tax should be shown to be spent on providing the trading facilities. It is enough if some connection established between the tax and the trading facilities provided. The connection can be a direct one or an indirect one, as held by this Court in Bhagatram Rajeev Kumar v. Commissioner of Sales Tax Madhya Pradesh 1995 (96) S.T.C. 645. 'The concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such dealers, directly or indirectly, the levy cannot be impugned as invalid. Though not stated in the counter affidavit, we can take notice of the fact that the State does provide several facilities to the trade including laying and maintenance of roads, water-ways and markets etc. As a matter of fact, since the levy is by the State we must also look to the facilities provided by the State for ascertaining whether the State has established the compensatory character of the tax. On this basis, it must be held that the State has established that the impugned tax is compensatory in nature. This finding is by itself sufficient to negative the attack based on Article 301 but even if we assume that the State has not established the said fact, even so the result is no different. We proceed to elaborate:

13. Question No. 2: In case the impugned tax is not established to be compensatory - or as a measure of regulation - whether it is saved by virtue of the provision contained in Article 304(b) read with Article 255 of the Constitution. In other words (a) whether the Act has received the assent of the President as alleged by the State, (b) whether the levy of the said tax constitutes a reasonable restriction and (c) whether the said levy is conceived in public interest?

14. The impugned tax is a tax on entry--on movement of goods into a local area. If it is assumed to be neither compensatory, nor regulatory, (as mentioned above) it may be said to be offending Article 301, unless, of course, it is saved by virtue of the provisions contained Article 304(b) read with Article 255 of the Constitution, as contended by the learned Additional Solicitor General-

Article. 304 and Article 255 read as follows:

304. Restrictions on Trade and Intercourse among States; Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law:

(a) Omitted as unnecessary:

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the Slate as may be required in the public interest.

Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

255. Requirements as to Recommendations and previous Sanctions to be regarded as matters of Procedure only:- No Act of Parliament or of the Legislature of a State and no provisions in any such Act, shall be invalid by reason only that some recommendation or previous sanction required by the Constitution was not given, if assent to that Act was given.

(a) Where the recommendation required was that of the Governor: either by the Governor or by the President;

(b) Where the recommendation required was that of the Rajpramukh, either by the Rajpramukh or by the President;

For the exception in Article 304(b) to come to the rescue of the State, three requirements have to be satisfied, viz., (a) that the Bill was introduced or moved in the Legislature with the previous sanction of the President of India or that the Bill has been assented to by the President (as contemplated by Article (255), that the levy of the impugned tax constitutes a reasonable restriction and (c) that the said reasonable restriction is required in public interest?

15. In this case, the Bill was not introduced or moved in the Assembly with the previous sanction of the President as required by Article 304(b) but the contention of the State is that the Bill has been assented to by the President and hence, the requirement is satisfied. The writ petitioners deny the same. They point out that the impugned Act does not recite the said fact, it cannot however be said that in the absence of such recital, the said fact cannot be established aliunde. In support of its contention, the State relies upon para 11 of the supplementary counter-affidavit filed in the High Court and upon the telegram sent from Sri M.L. Gupta, Director (Home), New Delhi bearing No. 17/36/93-Judl, dated 22.8,1993 addressed to Sri P.S. Cheema, Commissioner and Secretary to the Governor, Bihar, Raj Bhavan, Patna. Para 13 of the counter affidavit reads:

11. That thereafter the Bill was introduced in the Assembly and it was passed on getting assent communication on 22nd August, 1993 and same was published in Bihar Gazette on 22nd August, 1993.The telegram reads thus:

Ref. Your Letter No. l414/GS(I) Dated 18.1.1993 President Assented to the Bihar Taxes on Entry of Goods into Local Areas Consumption. Use or Sale therein Bill, 1993 on 21.8.1993. Letter without comments follows:

In the absenee of any material to the contrary, we accept the averment of the State and hold that the requirement of prior consent has been satisfied in the case of the impugned Act.

16. The next question is whether the impugned tax constitutes a reasonable restriction and whether it is imposed in public interest? In other words, the question is whether the interference with and the restriction upon the freedom guaranteed by Article 301 in the form of the impugned taxes is reasonable one and whether it is required in public interest. The learned Additional Solicitor General says that both the requirements arc satisfied in this case. He says that in view of the sudden loss of revenue from the cess upon minerals as a result of the judgment of this Court in India Cement Limited and other judgments of the Patna High Court following it, public interest required the Slate to find alternative sources of revenue to keep its various welfare programmers and other governmental functions going and that the impugned tax was conceived as one of the alternate sources. He relies upon the statement in the counter affidavit of Sri Binoy Krishnan, filed on behalf of the State, referred to herein before, in support of his submissions. He also relies upon the objects and reasons appended to the Bill, which arc to the following effect:

To collect funds for various public welfare schemes and to implement various financial recommendations of the State Government, taxation according to the existing financial condition is highly essential.

With a view to fulfil the above object and to make the provisions of the Bihar Finance Act more workable, it is essential that tax is levied and collected on certain goods entering the local areas of the State for consumption, use or sale; Bihar Tax on Entry of Goods into Local Areas for Consumption. Use or Sale therein Second Ordinance, 1993, (Bihar Ordinance 19 of 1993) has been promulgated incorporating aforesaid provisions,

The object of this Bill is to get the essential provisions of the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Ordinance, 1993 substituted by an Act of the Legislature.

17. On the basis of the Statement of Objects and Reasons, the learned Additional Solicitor General contents that the levy of impugned tax was found 'essential' to raise funds for various public welfare schemes, to implement various financial recommendations of the State Government and to make the Bihar Sales Tax law more effective. It is suggested that public interest demanded that alternate and new sources be found for raising the money to meet the needs of the State and that, therefore, the levy was 'required' in the public interest. The 'learned Additional Solicitor General relies upon the following holding in State of Karnataka v. Hansa Corporation : [1981]1SCR823 : ... a levy which appears to be quite reasonable in its impact on the movement of goods and is imposed for the purpose of augmenting munieipal finances which suffered a dent on account of abolition of Octroi cannot be said to impose an unreasonable restriction on the freedom of inter-State trade, commerce and intercourse. In this connection, it would be useful full to recall the observations of this court in Khyrbari Tea Co. Ltd. case : [1964]5SCR975 that the power conferred on this Court to strike down a taxing statute if it contravenes the provisions of Arts. 14, 19 or 301 has to be exercised with circumspection, bearing in mind that the power of the State lo levy taxes for the purpose of governance and for carrying out its welfare activities is a necessary attribute of sovereignty and in that sense it is a power of paramount character. It is, therefore, idle to contend that the levy imposed an unreasonable restriction on the freedom of trade and commerce.18. The above observation is relied upon to show not only that the impugned tax was 'required' in the public interest but that is also reasonable. To demonstrate the reasonable character of levy, the learned Additional Solicitor General relics upon a few more circumstances. He points out that so far as motor vehicles, Indian-made foreign liquor, vegetable and hydrogenarted oil and cements (Items 1.3.4 and 5 in the Schedule to the Act) are concerned, the entry tax levied and collected thereon is given credit towards the sales tax payable on the sale of the said goods, which means that no additional burden is created on the dealers by the impugned levy. It is pointed out that entry tax is levied and collected mainly from the dealers in the said good/commodities and that a dealer brings said goods into a local areas only for the purpose of sale, Such sale attracts sales tax which is levied at a far higher rate than the entry tax. Once the entry tax paid in respect of a commodity goods is given credit towards the sales tax, there is in effect no levy of entry tax on these goods. Thus, no extra burden is cast by the impugned Act insofar as four out of six commodities mentioned in its Schedule arc concerned. These facts are not disputed by anyone before us. No such credit is, of course, given in respect of crude oil and tobacco products, which means that, in effect, the entry tax is being levied only upon two commodities, viz., tobacco production and crude oil. But there is a goods reason, says the learned Additional Solicitor General, for not providing for such credit in the case of the said two commodities. The reason given for not making a similar provision (giving credit) in the case of tobacco products is that no sales tax is levied, on tobacco products by the Slate of Bihar. Since no sales tax is levied on the sale of tobacco products, the question of giving credit to the entry tax against the sales tax docs not arise, says the Additional Solicitor General. This, no doubt, means that so far as tobacco products arc concerned, there is an additional levy of three per cent by virtue of the impugned Act and to that extent it may be said lo impede the freedom guaranteed by Article 301. The learned Additional Solicitor General, however, submits that the levy represents a reasonable restriction because of the negligible additional burden il creates and also because of the inherent nature of tobacco products. (It may be remembered that the nature of the activity is relevant in the matter of judging the reasonableness of the restriction imposed a well settled proposition under Article 19 and which proposition is equally relevant under Article 304(b) We are inclined to agree with the submission. It is stated by Sri. S. Ganesh, learned counsel for the ITC who is the main party said to have been affected by this levy, that the percentage of excise duties on tobacco products (duties of excise levied under the Central Excise and Salt Act, 1944 and the A.D.E. Act read with notifications issued in that behalf) is between 250 to 300 per cent of their value. Can it be said that an addition of three percent to the said level of taxation is unreasonable when the tax so levied and collected is going to serve the interest of the public in that State? Can it be reasonably suggested that this addition of three per cent is impeding the trade, commerce of intercourse in tobacco products directly and immediately or to any appreciable degree. We think not. In this connection, it is not irrelevant to take into consideration the harmful nature of the tobacco products. Though it may not have been recognised in 1957 when A.D.E. Act was enacted, it is not recognised by one and all that tobacco is injurious to health. (A warning to the above effect is statutorily required to be printed on all packets and cartons containing the tobacco products.) The extraordinary high level of excise duties on tobacco is meant precisely to discourage its consumption. In our opinion, therefore, it is not possible to say that the addition of three per cent is either an unreasonable restriction on the freedom of trade and commerce or that it is not required in public interest.

19. In this connection, it is necessary to notice a few decisions brought to our notice. In Bhagatram Rajeev Kumar 1995 (96) S.T.C. 654 a three Judge Bench of this Court has rejected the argument that to be compensatory, the tax must facilitate the trade. The reason is obvious: if a measure facilitates the trade, it would not be a restriction on trade but an encouragement to it. it was observed:

The submission of Shri Ashok Sen. learned Senior Counsel, that compensation is that which facilitates the trade only does not appear to be sound. The concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such declares directly or indirectly the levy cannot be impugned as invalid. The stand of the Stale that the revenue earned is being made over to the local bodies to compensate them for the loss caused, makes the impost compensatory in nature, as augmentation of their finance would enable them to provide municipal services more efficiently, which would help or case free-flow of trade and commerce, because of which the impost has to be regarded as compensatory in nature, in view of what has been stated in the aforesaid decisions, more particularly in Hansa Corporation's case : [1981]1SCR823 . (Italics supplied)20. In Shakti Kumar M. Sancheti v. State of Maharashtra 1995 (96) S.T.C. 659: 1994 A.I.R. S.C.W. 5007, the very same Bench has opined (at p.5009of A.I.R. S.C.W.):

A very perusal of these object and reasons would indicate that this legislation was brought in order to compensate loss of revenue by consumers who avoid payment of the sales tax or purchase tax on the vehicle payable in the State by purchasing it in another State where the rate was lesser than the State of Maharashtra and then to bring the vehicle inside the State. The legislature, therefore, clearly intended to avoid any loss of legitimate sales tax revenue by the State. But the levy cannot be held to be bad because the Legislature intended to avoid any loss of sales tax in the State so long as it is not found to be invalid because of any constitutional or statutory violation. It is not the intention or propriety of a legislation but it is a legality or illegality which renders it valid or invalid.

Both these decisions deal with entry tax levied by Madhya Pradesh and Maharashtra States respectively.

21. Now coming to the crude oil (Indian Oil Corporation is also a party before us), it is explained by the learned Additional Solicitor General that inasmuch as there is no no sale of crude in the State of Bihar, a provision for giving credit of entry tax against sales tax was thought to be unnecessary. It is explained that the crude from the oil fields in Assam is pumped to Baraumi Oil Refinery, located in Bihar, through a pipeline. The crude is refined here and petroleum and other products produced there from are sold. It is, therefore, submitted that while an entry tax is levied on the entry of crude in a local area, no provision has been made for giving credit/set off of such tax against the sales tax payable in as much as no crude is ever sold in Bihar and no lax is levied or collected thereon, as a fact.

22. Reliance is placed by the learned Additional Solicitor General upon the decision of the Constitution Bench in Khyerbari Tea Company Ltd. v. State of Assam : [1964]5SCR975 where it has been recognised that a tax levied by the State must be presumed to be reasonable restriction inasmuch as taxes are levied to raise money in order to carry on the function of the Government and to sustain the manifold activities undertaken by it. This decision also points out that the fact that President has given assent to the Bill also raises a presumption that the President (Central Government) had applied his mind to the problem and had come to the conclusion that the proposed tax constitutes a reasonable restriction and is required to be imposed in public interest. It is true that these are only presumptions but taken together with other material, referred to above, they do firmly establish the said requirement in Article 304(b). The learned Additional Solicitor General also relied upon the following holding in Hansa Corporation : [1981]1SCR823 :

The next question is whether this levy is in public interest. As has been pointed out earlier, the levy was to compensate the loss suffered by abolition of octroi. These very people were paying octroi without a demur. After removing the obnoxious features of octroi a very modest impost is levied on entry of goods in a local area and that too not for further augmenting finances of the municipalities but for compensating the loss suffered by the abolition of octroi is certainly a levy in public interest. As has been repeatedly observed by this Court, the taxes generally are imposed for raising public revenue for better governance of the country and for carrying out welfare activities of our welfare State envisaged in the Constitution and therefore, even if a tax to some extent imposes an economic impediment to the activity taxed, that by itself is not sufficient either to stigmatise the levy as unreasonable or not in public interest.23. Sri Ganesh, learned counsel for the I.T.C. points out that in Khyerbari Tea Co. Ltd. : [1964]5SCR975 . This Court did not rest its decision merely upon the presumption aforementioned and that as a fact, specific material was produced before the Court, by the State, that the funds in question were being utilised for keeping the roads in order and in maintaining the water-ways in the State. The statement filed by the State in that case did establish that the expenditure incurred by it in maintaining the water-ways was more than the revenue received from the carriage tax. It is because of the said material, Sri Ganesh says, that the levy was held to be a reasonable restriction. H is true that no such specific statement is contained in the counter-affidavit of the State in the cases before us but this circumstance is of no consequence herein for the reason that on the material brought to the notice of the Court and for the reasons recorded herein above, the requirements of Article 304(b) must be held to have been satisfied in this case. The attack upon the validity of the impugned Act on the ground of violation of Article 301 accordingly fails.

44. The scheme of the impugned Legislation, getting revealed by the provisions contained therein and the explanatory statement appended thereto, as we have adverted to earlier, if tested on the anvil of the principle evolved by the Apex Court, in the aforesaid decisions, it is idle to contend that the levy imposed by the impugned Tamil Nadu Legislation is not in public interest only, but also imposes unreasonable restrictions on the freedom of trade and commerce. This apart, it cannot be staled that the said levy is not compensatory or regulatory in character. Once we come to the conclusion, as above, the further requirement to be satisfied is that the Bill, as respects the impugned Legislation, ought to have been introduced or moved in the Legislature with the previous sanction of the President of India or that the Bill has been assented to by the President of India, as contemplated by Article 255.

45. Let us now take stock of the situation. As we have adverted to earlier, the Governor of Tamil Nadu, after obtaining the instructions of the President, in pursuance of the proviso to Clause (1) of Article 213 of the Constitution, promulgated an Ordinance captioned as 'the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Ordinance, 1990 (Tamil Nadu Ordinance No.l of 1990)' on the 19th February, 1990. The said Ordinance became an Act called 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act. 1990 (Tamil Nadu Act XIII of 1990)', which received the assent of the President on the 24th April. 1990 and published in the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Act, 1991 (Tamil Nadu Act XLV of 1993) had been passed bringing certain amendments to Sections 3 and 4 of the Principal Act. The said 1991 Amendment Act came into force on the 1st day of October, 1991 and it received the assent of the President on the 18th November, 1991. In exercise of the powers conferred by Clause (l) of Article 213 of the Constitution, the Governor of Tamil Nadu, on 4th January, 1997 promulgated an Ordinance called 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Ordinance 1997 (Tamil Nadu Ordinance No.l of 1997) by introducing certain amendments to the Principal Act. All sections, except clause (1) of Section 2 came into force at once and clause (1) of Section 2 should be deemed to have come into force on the 1st day of April, 1996. The said amendment Ordinance was repealed as in its place, 'The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas (Amendment) Act. 1997 (Tamil Nadu Act XIV of 1997) was enacted. All the sections except Clause (1) of Section 2 shall be deemed to have come into force on the 6th day of January 1977 and Clause (1) of Section 2 shall be deemed to have come into force on the 1st day of April, 1996. No doubt, true it is that the said Ordinance amending provisions of the Principal Act does not reveal that the Governor of Tamil Nadu promulgated such an Ordinance, after obtaining the instructions of the President. It is equally true that the aforesaid 1997 Amendment Act, which repealed the said Ordinance does not contain any in built or intrinsic material to point out that the Act so passed laterally obtained the consent of the President, in tune with the provisions adumbrated under Article 255 of the Constitution. In such a situation, what is the consequence that flows from is the next line of inquiry by us.

46. It is not as if such a situation did never arise for consideration before the Courts of superior jurisdiction and the plain fact is that such a situation did arise for consideration before the apex Court and the High Courts. We may now refer to such decisions.

(a)(i) In Subodhaya Chit Fund (P) Ltd. v. Director of Chits, Madras : AIR1991SC998 the Constitutional validity of Section 12 of the Tamil Nadu Chit Funds Act, 1961 (Tamil Nadu Act 24 of 1961 -as amended by the Amendment Act 14 of 1975) arose for consideration.

(ii) Section 12, as it stood before the amendment, required the foreman of the chit-scheme to execute an indenture by mortgaging property in favour and to the satisfaction of the Registrar by way of security for the realisation of the chit amount deposited in an approved bank. The said section after amendment required the foreman to deposit cash amount as security in such manner as prescribed. The conditions of depositing cash security were made more hazardous in the amended provisions of the section.

(iii) The vires of the amended Section 12 of the Tamil Nadu CHit Funds Act, 1961, was primarily challenged on the ground that the amendment was in violation of Article 301 read with Article 304 of the Constitution of India. It was contended that the provisions of the amended section were not reasonable restrictions made in public interest and were therefore beyond the competence of the Legislature. It was also argued that before enacting the impugned law the previous sanction of the President, as required under Clause (b) of Article 304 was not obtained.

(iv) On the first point, the High Court came to the conclusion that the amended provision was in public interest and was necessary to regulate the trade. The High Court observed as under.

Allowing a chit fund transaction to be run by a foreman without a proper security would be normally ruinous to he interests of the several poor subscribes who arc lured into the business by the promise of lumpsum payment. The precaution that the State has taken by the present legislation requiring enhanced deposits to be made is a prudent one and is essential for the purpose of regulating the chit fund trade. We see no restrictiveness at all in the measure.

(v) On the second question, the High Court relied upon the judgment of the Apex Court in Syed Ahmed Aga v. State of Mysore : AIR1975SC1443 and came to the conclusion that the amended provision only varied the form of restriction which was already inherent in the original Act. According to the High Court, since the principal Act had the sanction of the president, it was not necessary to obtain the sanction of the President for the amending Act.

(vi) On appeals, on a certificate against the judgment of the High Court upholding the validity of Section 12 of the Tamil Nadu CHit Funds Act, 1961, as amended by the Amendment Act XIV of 1975, the Supreme Court said in paragraphs 6 and 7 (at page 999) as below:

6. We have been taken through the judgment of the High Court. We see no infirmity in the same. We approve the reasoning and the conclusions reached by the High Court.

7. The appeals are, therefore, dismissed with no order as to cost.

(b) In H.D. & G. Mills v. State what Their Lordships constituting a Division Bench said in paragraphs 15 and 16 (at page 7) is relevant and the said paragraphs 15 and 16 (at page 7) is relevant and the said paragraphs read as under:

15. After giving my careful consideration to the points canvassed and in the light of the decisions referred to above, I am of the opinion, and I say so with great respect that the learned Judge erred in holding that the amendment of any provision of the Act requires the assent of the President even if that particular provision, which is amended, does not relate to any matter enumerated in the Concurrent List.

16. Articles 213(1) and 254 of the Constitution arc in these terms:

Article 213(1). If at any time, except when the Legislative Assembly of a State is in session, or where there is a Legislative Council in a State, except when both Houses of the Legislature are in session, the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinance as the circumstances appear to him to require:

Provided that the Governor shall not, without instructions from the President, promulgate any such Ordinance if-

(a) a Bill containing the same provisions would under this Constitution have required the previous sanction of the President for the introduction thereof into the Legislature; or

(b) he would have deemed it necessary to reserve a bill containing the same provisions for the consideration of the President; or

(c) an Act of the Legislature of the State containing the same provisions would under this Constitution have been invalid unless, having been reserved for the consideration of the President, it had received the assent of the President.

Article 254(1). If any provision of a law made by the Legislature of a State is repugnant to any provisions of a law made by Parliament which Parliament is competent to enact, or to any provision of any existing law with respect to one of the matters enumerated in the Concurrent list, then subject to the provisions of clause (2) the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of State shall to the extent of the repugnancy be void.

(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in the State.

Provided that nothing in this clause shall prevent parliament from enacting at any time law with respect to the same matter including a law adding to, amending, varying or repealing the law, so made by the Legislature of the State.

Both these Articles use the words 'provisions contained in an Act ' and not the entire Act. Article 254(2) also uses the words 'matters enumerated in the Concurrent List. Reading these two provisions, it becomes abundantly clear that if an Act, when enacted, contains any provision with respect to one of the matters enumerated in the Concurrent List, which is repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then the law so made by the Legislature of the State has to be reserved for the consideration of the President in order to enforce it. Thereafter, if any provision of that Act which does not relate to any of the matters enumerated in the Concurrent List, is sought to be amended, it will not require the assent of the President. Only the amendment of that provision of the Act will require the assent of the President which is with respect to one of the matters enumerated in the Concurrent List. Section 3 of the Act as originally enacted in 1961, did not relate to any of the matters enumerated in the Concurrent List and, therefore, its amendment, in my opinion, did not require the assent of the President. The learned Judge was of the view that since the power to acquire property under the Act was to be exercised by the Marketing Board the provision with regard to its constitution related to the acquisition of the property and was, therefore, relatable to Entry 42 in the Concurrent List. With great respect I do not find myself in agreement with learned Judge. To reiterate, I hold that the amendment of only that provision of an Act, containing provisions in respect of one of the matters enumerated in the Concurrent List, will requires the assent of the President for its enforcement, which relates to any such matter, but if it relates to the amendment of any other provision with respect to a matter, not enumerated in the concurrent List, it will not require the assent of the President for its enforcement. Since the correctness of the decision of the learned Judge has been doubted on this point, I hold that that case has not been correctly decided and overrule the same.

47. The principles evolved in the aforesaid cases are clearly applicable to the present actions. The aforesaid Amendment Act of course as already stated did not receive the assent of the President. But one thing which is certain, is relatable to the Principal Act is that it did receive the assent of the President. Neither the Principal Act nor the aforesaid Amendment is relatable to any matter in the Concurrent List. Both of them relate to Entry No. 52-List II of the Seventh Schedule of the Constitution. This apart, the Amendment Act only varied the form of restriction-about which, indications were made earlier -- which was inherent in the Principal Act. Such being the position, we are persuaded to hold that the fact that the Amendment Act did not receive the assent of the President is of no consequence.

48. The resultant product of discussion, as above, may not be summed up. It is idle to contend that the levy imposed by the impugned Tamil Nadu Legislation is not in public interest only, but also imposes inreasonable restriction on the freedom of trade and commerce. This apart, it cannot at all be stated that the said levy is not compensatory or regulatory in character. Top of all, the fact that the Amendment Act did not receive the assent of the President is of no consequences on the facts and in the circumstances of these actions. The questions cropping up for consideration relatable to the topics under discussion are thus answered.

VI Levy of Sales -Tax Under The Facade of Entry Tax

49. The grievance is that the nomenclature of the tax, though called as 'Entry Tax', what is actually done is the levy of 'Sales-tax' under the guise of 'Entry Tax', which is a violation of Article 286 of the Constitution. Support to such a puerile argument is sought for from the Statement of Objects and Reasons Clause of the impugned Legislation. The explanatory statement appended to the impugned Legislation quoted earlier, of course, states-in so explicit a fashion ~ that in order to curb the evasion of Sales-tax on the sale of motor vehicles, which are purchased outside the State and brought into the State, the Government have decided to levy a tax on entry of Motor Vehicles into Local Areas of the State, either for use or sale therein. It further states that the entry tax shall be leviable on the entry of motor vehicle and the tax paid by them shall be adjusted with the tax payable by them under the Tamil Nadu General Sales-tax Act, 1959 (Tamil Nadu Act of 1959). What is stated in the said explanatory statement had been translated into action by making the relevant provision in the impugned Legislation.

50. This facile argument as above, we rather feel, is nothing but an argument made in a camouflaged way, relatable to Legislative incompetence and colourable piece of Legislation, about which, we have given our anxious consideration, and after holding all the submissions emanated therefor as altogether untenable, recorded findings that this Court is unable to hold that the Legislature of the State was suffering from Legislative incompetence in enacting the impugned Legislation and that it is idle to contend that the impugned Legislation is a colourable one. The discussions made earlier in reaching such a conclusion, as above, will also hold good here and further discussion, if made, will result in jarring repetition indeed, and, therefore, it is we decide to leave it there, by adding nothing further. In this view of the matter, there is no other go for us, except to hold that the submission that the nomenclature of the tax, though called as 'entry-tax' - what is actually done is the levy of 'sales-tax', under the guise of 'Entry Tax', which is violation of Article 286 of the Constitution is rather a fallacious view of the matter, which cannot expect commendation and acceptance, at our hands and the question under topic is answered accordingly.

VII. Challenge on The Grounds of Violation of Articles 14 And 300A of The Constitution:

51. The question that arises for consideration here is as to whether Clause (1) of Sub-section (1) of Section 3 and Sections 12, 15-A and 19 are violative of Articles 14 and 300-A of the Constitution, inasmuch as they, it is said, confer upon the State Government an unguarded and uncanalised power.

52. Now, it is time for us to relate to those provisions:

(a) '3 Levy of Tax- (1) Subject to the provisions of this Act, there shall be levied and collected a tax on the entry of any motor vehicle into any local area for use or sale therein which is liable for registration in the State under the Motor Vehicle Act, 1988 (Central Act 59 of 1988).

The tax shall be

(i) where the importer is a dealer in motor vehicles, at such rate or rates, not exceeding twenty per cent, as may be fixed by the Government, by notification, on the purchase value of the motor vehicle:

(ii) where the importer is not a dealer in motor vehicles equal to the amount of tax that would have been payable under the General Sales Tax Act had the vehicle been purchased in the State.

Provided that in respect of any motor vehicle which was registered in any Union Territory or any other State under the law relating to motor vehicle -

(a) before the 10th September, 1995, no tax shall be levied and collected, if the owner of such vehicle applies for the assignment of anew registration mark in this State after a period of fifteen months from the date of its registration;

(b) on or after the 10th September, 1996, no tax shall be levied and collected, if the owner of such vehicle applies for the assignment of a new registration mark in this State after a period of eighteen months from the date of its registration.'

Explanation - For the purpose of this proviso the expression 'law relating to motor vehicle' means the Motor Vehicle Act, 1939 (Central Act IV of 1939 or the Motor Vehicles Act, 1988 (Central Act 59 of 1988), as the case may be.

(2) The tax shall be payable by an importer in such manner and within such time as may be prescribed

(b) 12. Exemptions - Subject to such conditions as it may impose, the Government may, if it is necessary so to do in the public interest, by notification, exempt any specified class of importers from payment of the whole or part of the tax payable under this Act.

(c) 15-A Impounding of Motor Vehicle:- If an importer liable to pay tax fails to pay the tax in the manner prescribed, then the competent authority shall forthwith impound the motor vehicle in respect of which tax has not been paid and keep the motor vehicle impounded till the amount of tax and penalty due and payable in respect of such motor vehicle is paid in full.

Provided that, if the amount of tax and penalty is not paid within one month of impounding of the motor vehicle, the competent authority shall have power to sell the motor vehicle by auction in such manner as may be prescribed and apply the sale proceeds towards recovery of the tax, penalty and costs, if any, incurred in the sale of such motor vehicle. The remainder, if any, shall be refunded to such importer.

Provided further that, if, at any time before the auction of the motor vehicle, the importer pays the tax, penalty and costs, if any, then the competent authority may after satisfying that all the dues as aforesaid have been fully paid by the importer, cancel the auction and return the motor vehicle to the importer.

Explanation - For the purpose of this section 'Competent authority' means the assessing authority and such other person or authority authorised by the Government, by notification, to perform the functions of the competent authority under this section.

(d) 19. Restriction on Registration - Notwithstanding anything contained in

any other law for the time being in force, where the liability to pay tax in respect of a motor vehicle arises under this Act and such motor vehicle is required to be registered in the State under the Motor Vehicle Act, 1988, no registering officer shall register any such motor vehicle unless payment of such tax has been made by the person concerned in respect of such vehicle.

CONSTITUTION

(d) Article 14: Equality before Law- The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.

(e) Article 300-A: Persons Not to be Deprived of Property save by Authority

of law - No person shall be deprived of his property save by authority of law.

53. In Bihar Chamber of Commerce case, : [1996]2SCR184 , Changing Section 3 and Exemption Section 6 of the Bihar Tax on Entry of Goods into Local Areas for Consumption. Use or Sale Therein Act. 1993 (Act No. XVI of 1993) were challenged as violative of Article 14 of the Constitution, inasmuch as they conferred upon the Government unguided and uncanalised power. Let us know relate Sections 3 and 6 of the said Act:

(a) 3. Charge of Tax - (1) There shall be levied and collected a tax on entry of scheduled goods into a local area for consumption, use or sale therein at such rate not exceeding five percentum of the import value of such goods as may be specified by the State Government in a notification published in an official gazette subject to such condition as may be prescribed.

Provided different rates for different scheduled goods and different local areas may be specified by the State Government.

(b) 6. Exemption From Tax - The State Government may by notification and subject to such conditions restriction as it may impose exempt from tax any class and dealer, persons or importers.

The High Court, in fact, struck down those provisions as being violative of Articles 14 of the Constitution.

(c) The Supreme Court, on appeals, reversed the verdict of the High Court on such aspect of the matter and upheld the constitutional validity of those sections and what the apex Court said in that connection is getting reflected in paragraph 39 (at pages 2357-2358) and it reads as under:39. The proviso to Section 3(1) empowers the State Government to specify different rates of entry tax for different commodities mentioned in the Schedule to the Act. This is, however, subject to the ceiling of five percent specified in Section 3(1) itself. In such a situation, it cannot be held that the power conferred upon the State Government to specify the rate of tax is unguided. In Municipal Corporation of Delhi v. Birala Cotton Spinning & Weaving Mills, Delhi : [1968]3SCR251 , it was held that where the power is given to a responsible elected body like the Municipal Corporation to prescribe the rates of tax subject to a ceiling prescribed and where the rates fixed have to be submitted to the Government for its sanction, it cannot be held to be a case of excessive delegation of legislative power. In this case, the delegation is to the State Government and a ceiling is also prescribed. The Sate Government must be deemed to be aware of the needs of the State and the interest of its people. It is the State Government that prepares the budget for every year. The very provisions of the Act and its scheme coupled with the above factors provide sufficient guidance to the Government in the matter of specification of the rates. It cannot, therefore, be held that the proviso confers an unguided power upon the State Government. Now, coming to Section 6, it confers upon the State Government the power to grant exemptions to any class of persons from the operation of the Act. Such a power has consistently been upheld by this Court in a number of decisions commencing from P.J. Irani v. State of Madras : [1962]2SCR169 . In fact, such a provision is a common feature in all the taxing enactments and many other enactments. It has been held that the very scheme and the provisions of the Act do provide the necessary guidance. Accordingly, we hold that the High Court was in error in declaring Section 6 to be void for being violative of Article 14.

54. What the Supreme Court said as above, is applicable on all fours, to all these actions, as relatable to the challenge of the Constitutional Validity of Sections 3 and 12 of the impugned Legislation.

55. Applying the principles evolved as above by the Supreme Court, we are persuaded to uphold the Constitutional Validity of Section 3 (i)(i) and Section 12 of the impugned Legislation.

56. Now, we shall turn our attention to consider the question as to whether Sections 15-A and 19 of the impugned Legislation are violative of Article 14 of the Constitution.

57. Section 15-A deals with impounding and sale by way of auction of impounded vehicles under certain contingencies and situations. It is a machinery provision to collect tax from defaulters, who failed to pay the tax, in the manner prescribed. The competent authority is empowered to seize and impound the vehicle and if the defaulters - assessees pay the tax and penalty within one month of the impounding of the vehicle, the competent authority shall have power to sell the motor vehicle by auction in the manner prescribed and apply the sale proceeds towards the recovery of tax, penalty and costs, if any, in the sale of such motor vehicle. The remainder, if any shall be refunded to such importer. If at any time, before the auction of the motor vehicle, the importer pays the tax, penalty and costs, if any, then the competent authority may cancel the auction and return the vehicle to the importer.

58. Section 19 imposes certain restrictions on registration of motor vehicle imported into any local area for use or sale therein. The restriction imposed is relatable to the registration of the vehicle in this State. No Registering Officer shall register any such motor vehicle, unless payment of such tax has been made by the person concerned, in respect of such vehicle. This sort of a restriction is sought to be imposed by the introduction of a non-obstanate clause, notwithstanding anything contained in any other law for the time being in force'.

59. The poser, in such a situation, is whether the power given to the executive, in the shape of prohibition for registration, besides seizure and impounding of such a vehicle for non-payment of tax and penalty under the impugned Legislation can never be said to pass the test of reasonableness. The answer to such a poser cannot be anyone, other than an emphatic 'no', on the facts and in the circumstances of the present cases. This scheme of the impugned Legislation and the Rules made thereunder, if perused with a little bit of care, caution and circumspection, it is clear that sufficient and adequate opportunity has been provided for the importers to file return and pay the necessary and requisite tax, if they are liable to pay tax and also to file return, even if they are not liable to pay tax. Enough provisions are made available to dispute their liability by way of appeals and revisions before the competent forums. It is only when the importers commit default in paying the necessary and requisite tax in the manner prescribed, their vehicles become liable for seizure and impounding and when once the tax and the other dues, if any, are paid within a month of such impounding or before the auction of the vehicles, then those vehicles are released. Likewise, if tax due and payable is paid, there is no question of refusal on the part of the Registering Authority to register the vehicle. The measures and restriction contemplated by Section 15-A and 19 are only for the realisation of the legitimate tax due and payable and nothing further. In the absence of such measures and restrictions cocksure, it is, we rather feel, the provisions of the impugned Legislation cannot at all be implemented, in the sense of realisation cannot at all be implemented, in the sense of realisation of the tax due and payable becoming a distant dream or a mirage. We are therefore of the view that such measures and restrictions can never be said to be grossly unreasonable, as being violative of Article 14 or to deprive the imports of their motor vehicles, offending Article 300-A of the Constitution, inasmuch as it cannot at all be stated that the importers of such a vehicle are having any right to refuse to pay the legitimate tax demanded of them. In this view of the matter, nonpayment of such tax, which resulted in stringent measures being taken either for refusal of registration or by seizure and impounding of such vehicle, until the payment of tax and all legitimate dues alone was the prime cause that led to enact the impugned Legislation.

60. For the reasons, as above, we declare that Sections 3(1 )(i), 12. 15-A and 19 of the impugned Legislation are not void of being violative of Articles 14 and 300-A of the Constitution.

VIII. REPUGNANCY:

61. The impugned Legislation is admittedly a State enactment framed on the basis of Entry 52-List II of the Seventh Schedule to the Constitution, which had already been extracted. The Motor Vehicles Act, 1988 (Act 59 of 1988 -as amended by Act 54 of 1994) is a Central enactment framed under Entry 35 of Part III of the Seventh Schedule to the Constitution and the said Entry reads:

'35. Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied.'

62. Certain provisions of the impugned Legislation in these actions, it is said, are in conflict or repugnant to the provisions contained in the Motor Vehicles Act, 1988. The question is whether there are any provisions in the Constitution to resolve the conflict or repugnancy, if any. The further ancillary or incidental question, which may arise for consideration is as to what is meant by 'repugnancy' to 'conflict' in Constitutional parlance. For a solution to such a question, it is not as if, no guidance, in the shape of precedent emerging from the Apex Court of this country and High Courts are not available. We may refer to some of them.

63(a). In M. Karunanidhi v. Union of India : 1979CriLJ773 what the Constitution Bench of Supreme Court in paragraph 8 (page 902-903) is relevant and the said paragraph reads as under:

'8. It would be seen that so far as clause (1) of Article 254 is concerned it clearly lays down that where there is a direct collision between a provision of law made by the State and that made by Parliament with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the State law would be void to the extent of the repugnancy. This naturally means that where both the State and Parliament occupy the field contemplated by the Concurrent List then the Act passed by Parliament being prior in point of time will prevail and consequently the State Act will have to yield to the Central Act. In fact, the scheme of the Constitution is a scientific and equitable of legislative powers, between Parliament and the State Legislatures. First, regarding the matters contained in List 1, i.e. the Union List to the Seventh Schedules, Parliament alone is empowered to legislate and the State Legislatures have no authority to make any law in respect of the Entries contained in List 1. Secondly, so far as the concurrent List is concerned, both Parliament and the State Legislatures are entitled to legislate in regard to any of the Entries appearing therein, but that is subject to the condition laid down by Article 254(1) discussed above. Thirdly, so far as the matters in List II. i.e. the State List are concerned, the State Legislature alone are competent to legislate on them and only under certain conditions Parliament can do so. It is, therefore, obvious that in such matters repugnancy may result from the following circumstances:'

'1. Where the provisions of a Central Act and a State Act in the Concurrent List are fully inconsistent and are absolutely irreconcilable, the Central Act will prevail and the State Act will become void in view of the repugnancy.

2. Where, however, a law passed by the State comes into collision with a law passed by Parliament on an Entry in the Concurrent List, the State Act shall prevail to the extent of the repugnancy and the provisions of the Central Act would become void provided the State Act has been passed in accordance with clause (2) of Article 254.

3. Where a law passed by the State Legislature while being substantially within the scope of the entries in the State List entrenches upon any of the Entries in the Central List the constitutionality of the law may be upheld by invoking the doctrine of pith and substance if on an analysis of the provisions of the Act it appear that by and large the law falls within the four corners of the State List and entrenchment, if any, is purely incidental or incosequential.

4. Where, however, a law made by the State Legislature on a subject covered by the Concurrent List, is inconsistent with and repugnant to a previous law made by Parliament, then such a law can be protected by obtaining the assent of the President under Article 254(2) of the Constitution. The result of obtaining the assent of the President would be that so far as the State Act is concerned, it will prevail in the State and overrule the provisions of the Central Act in their applicability to the State only. Such a state of affairs will exist only until Parliament may at any time make a law adding to or amending, varying or repealing the law made by the State Legislature under the proviso to Article 254.

(b) In A.P.S. W.I.Co.-op. Society Ltd. v. Labour Court, Hyderabad : AIR1987AP182 what the Full Bench of the Andhra Pradesh High Court, after taking into consideration very many precedents emerging from Supreme Court, said in paragraphs 14 to 17 (pages 180-190), which are necessary for the present purpose is as below:

'14. Broadly speaking, the Parliament or the Centre has exclusive legislative powers over the matters enumerated in List I. The matters in List II are the exclusive preserve of State Legislatures. Matters on which both the Centre and the States could legislate are found in List III of the Concurrent List. It may sometimes happen that in the course of making a law, one may incidentally trench upon a subject assigned to the other for the reason that the entries in the Lists have to be widely construed and some amount of overlapping could not altogether be avoided. If the legislation is, in pith and substance, on a matter assigned to one legislative body, an incidental encroachment into the territory of the other could be considered permissible. Pith and Substance and 'incidental encroachment' are the doctrine evolved by Courts to ensure that the federal machinery could function without serious friction.

In case of conflict between the entries in Lists I and II the question would be one of competency, to be decided with reference to the pith and substance of the matter, not one of repugnancy. Repugnancy as has been pointed out by the Supreme Court in Hoechst Pharmaceuticals Ltd., v. State of Bihar : [1985]154ITR64(SC) , would arise only when both the legislative bodies operate in a field common to them i.e. when they simultaneously legislate on the same matter in the concurrent list and speak in different voice. Inconsistency would arise when the provisions of two could not logically exist at the same time, or when they clash impose contradictory duties or confer contradictory rights. Where there is direct conflict between two provisions, or where one could not be obeyed without disobeying the other, a clear case of repugnancy might appear.

15. We do not find any substance in the argument that the very fact that the President's assent was sought and obtained, established beyond doubt that there was repugnancy between the two legislations. There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. There might be a genuine doubt about the applicability of any of the provisions of the constitution which required the assent of the President to be given to it in order that it must be effective as Act. If the Governor in exercise of his discretion decided to reserve the Bill in such a situation for consideration of the President to avoid any future complication that Act would not be put forward as a proof of the existence of repugnancy between the Parliamentary enactment and the Bill which had been reserved for the assent of the President.

16. The landmark decisions of the Supreme Court in Zaverbhai v. State of Bombay : [1955]1SCR799 , Tika Ramji v. State of U.P. : [1956]1SCR393 ; Deepchand v. State of U.P. : AIR1959SC648 ; Karunanidhi v. Union of India : 1979CriLJ773 and Hoechst Pharmaceuticals v. State of Bihar : [1985]154ITR64(SC) have by now settled the legal position so authoritatively and the principles laid down are so well know that we do not consider it necessary to quote passages from them for the purpose of this judgment, suffice to note that broadly speaking the tests for ascertaining repugnancy, in the light of the guiding principles contained in those decisions, could be stated in a nutshell as follows:

(i) Whether there is direct conflict between the two provisions.

(ii) Whether Parliament entered to lay down an exhaustive Code in respect of the .subject matter replacing the Act of the Stale Legislature and

(iii) Whether the law made by Parliament and the law made by the State Legislature occupy the same field.

17. We have already noticed that the Full Bench has recorded the opinion that the I. D. Act and the Shops Act did not occupy the same field. It is also categorical that there was no inconsistency between the two Acts. Further, it has found that the Parliament did not evidence any interest to lay down an exhaustive Code in respect of the subject matter replacing the Act of the State Legislature which, in fact, was found to occupy only a much narrower field. The underlying principle is that the question of repugnancy arises only when both the legislatures are competent to legislate in the same field with respect to one of the matters enumerated in the concurrent list and therefore Article 254(1) cannot apply unless both the Union and the State laws relate to a subject specified in the Concurrent list, and they occupy the same field,

This being the position there appears to be no legal basis for the conclusion reached by the Full Bench.

64. In the light of the guidelines or the principles, as evolved in the aforesaid decisions, it cannot at all be stated that there is any sort of repugnancy between the provisions contained in the two enactments now in question, inasmuch as the Legislative bodies operate in a field not common to them, as indicated earlier. The conflict, if at all any would be one of competency to be decided with reference to the pith and substance of the matter, not one of repugnancy. If the Legislation is, in pith and substance, on a matter assigned to one Legislative body, an incidental enactment into the territory of the other would be considered permissible, so that federal machinery could function without serious friction. The impugned Legislation-a State Legislation in pith and substance, operates on a field assigned to a State List, that is so say, Entry 52 List II to the Seventh Schedule to the Constitution. The Motor Vehicles Act, 1988 - a Central Legislation - operates on a list, that is to say. Entry 35 List III of the Seventh schedule to the Constitution. Thus, the two Legislations operate on different fields of the Legislative activities. While making the impugned Legislation, possibility of incidental encroachment or overlapping could not altogether be avoided. The encroachment said to have been made by the impugned Legislation is relatable to the registration of the Vehicle in this State imported from outside attracting entry tax. No doubt, Section 19 of the impugned Legislation, places some restriction on the registration of the vehicle, which attracts payment of entry tax. What the Sections prescribes is that notwithstanding anything contained in any other law for the time being in force, where liability to pay tax in respect of a motor vehicle arises under the said Act, no Registering Officer shall register any such motor vehicle unless payment of such tax has been made by the person concerned in respect of the said vehicle. To put it differently, this means that although there is no impediment for the registration of the vehicle, according to the relevant provisions of the Motor Vehicles Act, 1988, yet the registration of such a vehicle is prohibited until the payment of entry tax legitimately due on such vehicle, has been made. The impugned Legislation we rather feel, is of a matter assigned to the Legislative body of the State and such being the case, this sort of an incidental encroachment cannot at all be considered bad, in the eye of law, for the reason that entries in the List have to be widely constructed and some amount of overlapping could not altogether be avoided. In the view we have taken, it goes without saying that the ground of repugnancy, as urged under this topic, has to face dismal failure.

IX. Interpretation Of Charging Section 3

and

X. Applicability of The Impugned Legislation to The Factual Matrix of The Individual Case.

65. These question go together. Such questions ordinarily fall for discussion and decision in the arena of the taxing authorities. Adequate machinery and procedure have been prescribed under the provisions of the impugned Legislation and the Rules made thereunder. Initially, the assessment have to be completed and an order therefore is required to be passed by the authority prescribed under the said Legislation. The assessees, if aggrieved by the assessment orders may resort to appeals and further revisions, in the manner prescribed. The Tax authorities therein have the necessity and requisite power and jurisdiction to consider those questions. Further, particularly, the question relating to the applicability of the impugned Legislation to the factual matrix of an individual case has to be determined by the authorities under the said legislation, keeping in view, the materials placed before them. This Court, therefore, cannot make any pronouncement in this regard, in view of the limited scope of the writ jurisdiction. The questions under these topics are thus answered.

XI Maintainability of These Actions -- Power of The Honourable The Chief Justice, In The Matter of Allocation of Work to The Honourable Judges, by Constitution of Single or Larger Bench:

66. Events leading to the raising of questions relatable to the topic under discussions-about which, we have adverted to in greater details require to be restated in a sharp and incisive fashion, in order to understand in what manner the power of the Honourable the Chief justice, in the matter of allocation of work to the Honourable Judges, by constitution of a single or a larger bench, is challenged.

67. To recapitulate, countless number of writ petitions, day~in~and day-out being filed, admitted and Rule Nisi issued, by a learned single Judge of this Court, to whom the Honourable the Chief Justice allocated such work, besides passing interim orders or directions preventing or prohibiting the State from implementing the provisions of the impugned Legislation in the sense of tying the hands of the State in levying and collecting the entry tax from the importers of motor vehicles from outside the State for the purpose of use or sale therein, lured the Registry perhaps by the public interest - the safeguarding of which gives credibility and face-lift, in the eyes of the public, to the administration of justice system - to bring to the notice of the Honorable the Chief Justice, of course, by a Note put up to him, of such alarming situation. The Honourable the Chief Justice in turn administratively passed an order, seizing power under Rule 1-A of the Rules of the High Court of Judicature at Madras in its Appellate Jurisdiction, withdrew those matters ~ the present actions -- pending before a learned single Judge and posted them before a Division Bench First Bench -- consisting of the Honorable the Chief Justice and AR. Lakshmanan, J. on account of two factors, viz., (1) to avoid multiplicity of proceedings; and (2) Constitutionality of the impugned Legislation being challenged. Thereafter, the said learned single Judge, before whom, similar writ petitions came to be filed, also referred them to the Division Bench.

68. These actions writ petitions, being grouped together were listed before the First Bench, as stated above, for final disposal, learned counsel appearing for the petitioners in these actions, raised certain questions, putting the Honourable the Chief Justice in an embarrassing position. The question so raised revolved on the power of the Honourable Chief Justice in the matter of allocation of work to the Honourable Judges by Constitution of single or larger Bench. Two questions were actually raised therefor. They are:

(1) The Honourable the Chief Justice has no power at all to withdraw matters

posted before a learned single Judge and post them before a Division Bench, inasmuch as the power-- vested in him in the matter of application of work relatable to relevant Rules being administrative in nature - once exercised gets exhausted and therefore, it cannot at all be revived and exercised any further, although it is open to learned single Judge, before whom such matters were initially posted, to pass an order on the judicial side, referring them to a larger Bench: and

(2) Suo motu actions emerging therefor on the part of the Honorable the Chief Justice divests the right of appeals inhering in favour of the petitioners, which causes prejudice to the cause of justice.

69. The Honourable the Chief Justice, being placed in such a predicament and embarrassing situation, referred these actions to another Division Bench, to which he is not a member, although he was of the view that the questions so posed have no legs to stand, in the eyes of law and that is how, these matters came to be posted before us.

70. Before we delve and dive deep into such questions profitable it is, for us to refer to certain precedents on this aspect of the matter, emerging from the Apex Court and the High Courts.

(a) In S.M. Basu v. S.R. Sarkar : AIR1961Cal461 . what their Lordships of the Calcutta High Court said in paragraph 7 (page 465) is relevant and the said paragraph reads as under:

(7) Now, it is true, in Rule 9 of the Appellate Side rules Chapter II, there is no express provisions corresponding to the proviso (ii) to Rule 1 which relates to civil matters. But this does not, in our opinion, take away the inherent power of the learned Chief Justice to refer any matter to a Bench of three Judges when the matters is of some importance. As already pointed out, sub rule (1) of Rule 9 provides that a Criminal Bench may consist of 2 or more Judges. Ordinarily, a Bench consists of 2 Judges excepting in matters which can be disposed of by a single Judge. A criminal matter would be referred to a larger Bench consisting of three or more Judges only when the matter is of considerable importance. The Chief Justice, may, on his own initiative, allot such an important matter to a Bench of three Judges, or his attention may be drawn to the fact that the matter is of some importance and then he may exercise his discretion and refer the matter to a larger Bench. In the present case, the attention of the learned Chief Justice was drawn to the fact that the matter was of some importance, by the Bench of two Judges to which the cases had been referred in the first instance. There was nothing illegal in drawing the attention of learned Chief Justice to the fact that the cases involved matter of importance and recommending that the cases should be referred to a larger Bench. Therefore, the learned Chief Justice acted in the exercise of his inherent jurisdiction and referred the cases to a larger Bench, namely, this Bench, and we do not think that there was any illegality in such reference, and, therefore, there can be no question as to our competence to deal with the matter.(b) In Pramatha Nath v. Saroj Ranjan : AIR1962SC876 (From Calcutta : AIR1961Cal461 ), a Bench consisting of S.K. Das, J., L. Kapur and M. Hidayathullah, JJ., happened to consider, among other questions of merits of the case, the question relatable to the inherent power of the Honourable the Chief Justice in the matter of allocation of work to the Honourable Judges by constitution of a single or larger Bench. Though there was difference of opinion on the question of merits of the case among. Their Lordships constituting the said Bench-- about which, we are not presently concerned-yet, complete unanimity came to prevail among them relating to the inherent power of the Honourable the Chief Justice in the matter of allocation of work to the Honourable Judges by constitution of single or larger Bench. The opinion expressed by S.K. Das, J. on this aspect of the matter is getting reflected at paragraph 12 (pages 882-883), which reads as under:

'12. Now as to the first question, chapter II of the Rules of the High Court at Calcutta (Appellate Side) deals with the constitution and powers of the Benches of the Court. Rules 1 of the said chapter says in effect that a Division Bench for the hearing of appeals from decrees or orders of the subordinate Civil courts shall consist of two or more Judges as the Chief Justice may think fit; there is a proviso (proviso (ii) to the rule which says that on the requisition of any Division Bench, or whenever he thinks fit, the Chief Justice may appoint a Special Division Bench to consist of three or more Judges for the hearing of any particular appeal, or any particular question of law arising in any appeal, or of any particular question of law arising in an appeal, or of any other matter. It is clear that the rule and the proviso deal with the hearing of appeals from decrees or orders of the Subordinate Civil Courts, in other words, they deal with civil matters. Rule 9 of the same chapter deals with criminal matters and sub-rule (1) of the said rule says that a Division Bench for the hearing of cases on appeal, reference, or revision in respect of the sentence or order of any Criminal Court shall consist of two or more Judges. There is no proviso to this rule similar to the proviso to Rule 1, referred to earlier, and the argument is that in the absence of such a proviso it was not open to the Division Bench, consisting of Mukherjee and Bose, JJ, to refer the case back to the Chief Justice for the constitution of a larger Bench (though it was open to the Chief Justice to constitute originally a Division Bench of Three Judges to hear the case), and if the Judges were equally divided in opinion, Section 429 of the Code of Criminal Procedure would apply and the case had to be laid before another Judge and judgment given according to the opinion of the third Judge. I am unable to accept this argument as correct. It is clear from the rules in Chapter II that the constitution of Benches is a matter for the Chief Justice and Rule 13 in Chapter II says that a Full Bench appointed for any of the purposes mentioned in Chapter VII, Rules 1 to 5, shall consist of five Judges or three Judges as the Chief Justice may appoint, Now, Rule 1 in Ch.VII says inter alia that whenever one Division Bench shall differ from any other Division Bench upon a point of law or usage having the force of law, the case shall be referred for decision by a Full Bench and Rule 5 says that if any such question arises in any case coming before a Division Bench as a Court of Criminal Appeal, Reference or Revision, the Court referring the case shall state the point or points on which they differ from the decision of a former Division Bench, and shall refer the case to a Full Bench for such orders as to such Bench seem fit. In his judgment, P.S. Mukherjee, J., referred to two earlier decisions of the Calcutta High Court, Nilratan Sen v. Jogesh Chandra Bhatttacharjee ILR 23 Cal. 983 and Koma Chandra Pal v. Gourchand Adhikaya ILR 24 Cal. 286 and observed that the question as to whether those decisions were good law arose in the case and he gave that as a reason for referring the case to the Chief Justice for the constitution of a larger Bench. Even if Rules 1 and 5 in Chapter VII may not, strictly speaking, apply to the present case because the Division Bench consisting of Mukherjee and Bose, JJ., did not formulate the point or points, on which they differed from the earlier Division Bench decisions referred to by Mukherjee, J., I think that the principles of those rules would apply and it was open to the Chief Justice on a reference by the Division Bench, to constitute a larger Bench to consider the case. I am also in agreement with the view expressed by the Special Bench that the absence of a proviso to Rule 9 in Chapter II corresponding to the proviso to Rule 1 does not take away the inherent power of the Chief Justice to refer any matter to a Bench of three Judges. Sub-rule (1) of Rule 9 itself provided that a Division Bench for the hearing of cases on appeal, reference, or revision in respect of the sentence or order of any Criminal Court shall consist of two or more Judges. Therefore, it was open to the Chief Justice to constitute a Bench of three Judges for hearing of the case and in my view it made no difference whether he constituted such a Bench originally or on a reference back by the Division Bench. I further think that the Chief Justice must have the inherent power to constitute a larger Bench in special circumstances. Take, for instance, a case where one Judge of the Division Bench feels, for a sufficient and good reason, that he should not hear the case It is obvious that in such a case the matter must be referred back to the Chief Justice for the constitution of another Bench. The Chief Justice, I think, must possess such an inherent power in the matter of constitution of Benches and in the exercise thereof he can surely constitute a larger Bench in a case of importance where the Division Bench hearing it considers that a question of the correctness or otherwise of earlier Division Bench decisions of the same court will fall for considerations in the case. Section 429 of the Code of Criminal Procedure does not apply to such a case because it is not a case where the Judges composing the Court are equally divided in opinion. Rather it is a case where the Judges composing the Division Bench consider that the case is one of such importance that it should be heard by a larger Bench.What Kapur, J. (for self and Hidayathullah, J.) said is getting reflected in paragraph 62 (at page 903) and it reads as follows:

(62) In regard to the power of reference to a larger Bench, we are in agreement with S.K. Das, J. and in the circumstances it is unnecessary to express an opinion as to the applicability of Section 196A Criminal Procedure Code to the facts of this case.(c) In In Re Renganayakulu. AIR 1956 And 161 the questions relating to the powers of the High Court prior to the Constitution, that is to say, that is to say, pre-existing powers of the High Court, among others, to make rules and to regulate the sittings of the Court and the members thereof sitting alone or in Division Courts came to be considered. What the majority of the Full Bench said in paragraphs 9 to 15 (pates 164-165) is relevant and they read as under:

(9) Article 225 affirms the pre-existing powers of the High Court, among others, to make rules and to regulate the sittings of the Court and the members thereof sitting alone or in Division Courts. These powers, as already indicated, were conferred on the High Court by the Charter Act, by the Letters Patent and later by the Government of India Act. Article 372 saves laws in force in the territory of India, notwithstanding the repeal of the Government of India Act.

A combined reading of these two provisions clearly indicates that the power of the High Court controlled on it by the Acts repealed or otherwise can be exercised after the Constitution and the Rules already made by the High Court before the Constitution, in exercise of those powers, are also continued after the Constitution. No doubt, such power or the Rules made thereunder will be subject to the laws made by a competent Legislature or authority.

(10) The Supreme Court in Edward Mills Co., v. State of Ajmer : (1954)IILLJ686SC considered the scope of Explanation I. There it was argued that the Government of India Act stood repealed by Article 395 of the Constitution and, therefore, an order issued under Section 94(3) Government of India Act would not possibly be operative after the inauguration of the Constitution; nor could it be regarded as an order made under Article 239 of the Constitution.

After negativing the contention that the order issued under that Act was not a law in force within the meaning of Article 372, Their Lordships observed at page 31 that an order made under Section 94(3) Government of India Act conferring certain powers on the Chief Commissioner was really in the nature of legislative provision, which defines his powers in respect of the province and, therefore, being the commencement of the Constitution would continue to be in force under clause (1) of the Article,

(11) This decision therefore, is clear authority for the position that even though the Government of India Act was repealed, the laws made-under the Act continue to be in force after the Constitution under Article 372(1). If so, a fortiori the rules made by the High Court in exercise of the powers conferred under the Letters Patent which have not been repealed would certainly continue to be in force.

(12) The argument of the learned counsel, namely, that the Letters Patent was made in England and therefore, it was not a law made by an authority in the territory of India has no force. He argues that the preposition 'in' in Explanation I, indicates that the authority making the laws should have resided in India, but the terms of the Explanation do not, support such a contention 'Law in force' under the Explanation includes a law passed by a competent authority in the territory of India, before the commencement of the Constitution.

The phrase 'in the territory of India' governs the law made by the authority. If the authority though residing outside the territory of India had the jurisdiction to make a law in the territory of India it would certainly be a law made by an authority in the territory of India. It cannot be denied that Her Majesty had the power to issue the Letters Patent to operate in the territory of India. Though the Letters Patent was issued in England it was made by an authority competent at that time to make a law to have force in the territory of India and therefore it was a law in force in the territory of India before commencement of the Constitution within the meaning of Article 327(1) of the Constitution.

That apart, the authority which made the rules in question, namely, the High Court of Judicature at Madras, was certainly situated within the territory of India, and, therefore, the rules in question were made by an authority residing in India. Under Article 372, the said Rules, being the law in force in territory of India immediately before the commencement of the Constitution, continued to be in force after the Constitution.

(13) It is then contended that even if the rules continued to be in force, the President, by issuing the Adaptation of Law Order, 1950, by necessary implication, repealed the said Rules. The contention is that under the said Order Adaptations, were made only in regard to existing Central law. Provincial laws and State laws and that no provision was made for bringing the Letters Patent of the Rules made by the High Court thereunder in conformity with the constitution and therefore, the President, by implication, repealed Letters Patent and the Rules framed thereunder.

Reliance is also placed upon the definition of 'existing Central law' which excludes an Act of Parliament of the United Kingdom or any Order in Council, Rule or other instrument made under such an Act. But this argument ignores the fact that the power of the President under Article 372(2) is limited in scope and is only intended to bring any law in force in conformity with the provisions of the Constitution.

In the case of Rules made by the High Court under the Letter Patent or Acts 24 and 25 vie, there is no need to bring the rules in conformity with the Constitution. Article 225, in terms, preserves the powers of the High Court, which it derived under the Letters Patent and other statutes made by the Parliament of the United Kingdom. Under Article 225, the jurisdiction of, and the law administered in, any existing High Court and respective powers of the Judges thereof, in relation to the Administration of justice in the Court, including any power to make rules of Courts, and to regulate the sittings of the Court and of members thereof, sitting alone in Division Court or shall be the same as immediately before the commencement of the Constitution.

The rules already made by the High Court are continued under Article 372 and the powers, whereunder they were made, are preserved under Article 225. As the High Court continued to possess the power to make such rules, the rules already made need not be brought in conformity with the provisions of the Constitution, as there is no incongruity between the said rules and the provisions of the Constitution.

(14) Even otherwise, para 17 of the Adaptation of the Laws Order, 1950, expressly saves the rules made my the High Court. It says,

The provisions of this Order which adapt or modify arty law so as to alter the manner in which the authority by which, or the law under or in accordance with which, any powers are exercisable, shall not render invalid any notification, order, commitment, attachment, by-law, rule or regulation duly made or issued, or anything duly done, before the appointed day; and any such notification order, commitment, attachment, by law, rule, regulation or thing may be revoked, varied, or undone in the like manner to the like extent and in the like circumstances as if it has been made, issued or done, after the commencement of this Order by the competent authority and under and in accordance with the provisions then applicable to such a case.

(15) Assuming without admitting that the adaptation of Laws Order by necessary implication revoked the powers conferred on the High Court by the Letters Patent or other statutes to make rules, the rules, already made arc saved under the express provisions of the aforesaid rule, I therefore reject this contention.

(d) In S.K. Misra v. State : AIR1987All162 writ petition was filed in the Lucknow Bench of the Allahabad High Court.

(i) A Division Bench of the Court apparently on the view that as no part of the cause of action had arisen within any of the districts of the erstwhile Oudh, the writ petition could not be presented or entertained in the Lucknow Bench of the Court, ordered the writ petition to be returned to the petitioner for being presented to the High Court at Allahabad. Aggrieved by that Order, the petitioner filed a Special Leave Petition before the Supreme Court. The Supreme Court, while permitting the withdrawal of the Special Leave Petition directed that as the High Court of Allahabad was not functioning due to strike of advocates, the petition may be represented to the Lucknow Bench and the Lucknow Bench shall entertain the matter afresh.

(ii) In pursuance of the order of the Supreme Court, the petitioner represented the writ petition before the Lucknow Bench and the writ petition was admitted. Consequent upon the strike of the advocates at Allahabad being called off, the Chief Justice of the Court passed an order that all cases pertaining to Allahabad jurisdiction, but permitted to be filed before Lucknow Bench during the strike period shall be immediately transferred to Allahabad for further disposal. It was alleged that in view of the order passed by the Supreme Court, the Lucknow Bench was not only to permit the petitioner to present the writ petition before it, but also to decide it finally and hence, the order passed by the Chief Justice transferring the case to Allahabad was without jurisdiction.

(iii) The Full Bench held that the order passed by the Chief Justice as not without jurisdiction and that it was sustainable under Clause 14 of the U.P. High Court (Amalgamation) Order, 1949 and also under Rule 1 of Chapter 5 of the allahabad High Court Rules, 1952

(iv) The rationale for so holding is getting reflected in paragraph 17 (at page 168), which reads as under:

(17) Counsel for the petitioner also urged that the second proviso to C1.14 of the Amalgamation Order did not use the word transfer and that there was no other provision which entitled the Chief Justice to pass an order of transfer Suffice it to say so far as this submission is concerned that we have already pointed out that order dated 30th July, 1986, could apparently not be passed by the Chief Justice under the second proviso to C1.14. Moreover, undue emphasis cannot be placed on the use of the word 'transfer' in the said order. In effect, the import of the word 'transfer' used by the Chief Justice in his order dated 30th July, 1986, was that the case shall be sent to Allahabad and listed there for further disposal. Rule 1 of Chap.V of the Allahabad High Court Rules, 1952, reads as hereunder:-

'1. Constitution of Benches - Judges shall sit alone or in such Division Courts as may be constituted from tie to time and do such work as may be allotted to them by order of the Chief Justice or in accordance with his direction.'

2. In view of the said rule, it is in the competence of the Chief Justice to constitute various Benches from time to time and to allot such work to those Benches as may be ordered by him. He is also entitled to issue necessary directions in this behalf. When the Chief Justice passes particular Bench constituted by him it cannot be said that the said case stand transferred from one Bench to another in the sense the words 'transfer' is normally understood. It is just an allocation or allotment of work. The jurisdiction in this behalf vests exclusively in the Chief Justice in the Administrative side' In this view of the matter the order dated 30th 'July, 1986, passed by the Chief Justice is sustainable not only on the plain language of the first para of CI.14 of the Amalgamation order read with its first proviso, it is also sustainable under Rule 1 of Chap. V of the Rules of Court. In effect, by the order dated 30th July, 1986, the Chief Justice has directed that the instant case which was one of the cases which had been filed at Lucknow during the period when the Court at Allahabad was not functioning and which in the normal course could have been filed and entertained only at Allahabad, shall be listed for further disposal at Allahabad before such Bench as may be constituted by him.'

(e) In Mayavaram Financial Corporation Ltd., Mayiladuthrai v. The Registrar of Chits, Pondicherry, 1991 (2) LW 80 a Full Bench of this Court came to consider the powers of Chief Justice, as to the arrangement of posting of cases before a single or Division Bench Judges and what the Full Bench said in that regard is traceable to paragraphs 7 and 8 (at pages 85 to 87), which read as under:

'7. The Constitution of India has created the extra-ordinary writ jurisdiction of the High Court under Article 226 and in Article 225 thereof provided, subject to the provisions of this Constitution and to the provisions of any law of the appropriate Legislature made by virtue of powers conferred on the Legislature by this Constitution, the jurisdiction of, and the law administered in, any existing High Court, and the respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and or members thereof sitting alone or in Division Courts, shall be the same as immediately before the commencement of this Constitution.

Provided that any restriction to which the exercise of original jurisdiction by any of the High Courts with respect to any matter concerning the revenue or concerning any act ordered or done in the collection thereof was subject immediately before the commencement of this Constitution shall be no longer apply to the exercise of such jurisdiction.

This has not only saved the inherent jurisdiction of the High Court but also the Letters Patent including the incorporation of Section 108 of the Government of India Act. 1915 in CI.15 of the Letters Patent afore--quoted as also the rules framed by the High Court as provided under Section 108(1) or the said 1915 Act until such time when the appropriate Legislature by virtue or powers conferred by the Constitution made any law of the subject.

8. In National Thread Co., Ltd. v. James Cnadwick and Bros, Ltd. : [1953]4SCR1028 a question had arisen whether after the Constitution, any judgment of a learned single Judge was subject to appeal under CI.15 of the Letters Patent of the Bombay High Court or not; the Supreme Court has made certain observations which are profitable to understand the dispute raised before us. The Supreme Court has said after quoting Sub-section (1) of Section 108 of the Government of India Act, 1915.

This section is an enabling enactment and confers power on the High Courts of making rules for the exercise of their jurisdiction by single Judges or by division courts. The power conferred by the section is to circumscribed in any manner whatever and the nature of the power is such that it had to be conferred by the use of words of the widest amplitude. There could be no particular purpose or object while conferring the power in limiting its qua the jurisdiction already possessed by the High Court, when in the other provisions of the Government of India Act, it was contemplated that the existing jurisdiction was subject to the legislature power of the Governor General and the jurisdiction conferred on the High Court was liable to be enlarged, modified and curtailed by the legislature from time to time. It is thus difficult to accept the argument that the power vested in High Court under sub-S. (1) of S. 108 was a limited one, and could only be exercised in respect to such jurisdiction, as the High Court possessed on the date when the Act of 1915 came into force. The words of the sub-section 'vested in the Court,' cannot be read as meaning now 'now vested in the Court'. It is a well known rule of construction that when a power is conferred by a Statute that power may be exercised from time to time when occasion arises unless a contrary intention appears. This rule has been given statutory recognition in S. 32 of the Interpretation Act. The purpose of the reference to S. 108 in CI.15 of the Letters Patent was to incorporate that power in the character of the court itself, and not to make it moribund at that stage and make it rigid and inflexible. We are therefore of the opinion that Section 108 of the Government of India Act. 1915, conferred power on the High Court which that court could exercise from time to time with reference to its jurisdiction whether existing at the coming into force of the Government of India Act. 1915 or whether conferred on it by any subsequent legislation.

It was argued that simultaneously with the repeal of Section 108 of the Government of India Act, 1915 of the enactment of its provisions in Section 223 of the Government of India Act of 1935 and later on in Art 225 of the Constitution of India, there had not been any corresponding amendment of C1.15 of the Letters Patent and the reference to Section 108 in C1.15 of the Letters Patent could not therefore be taken as relating to those provisions, and that being so, the High Court had no power to make rules in 1940 when the Trade Marks Act was enacted under the repealed section and the decision of Mr. Justice Shah therefore could not be said to have been given pursuant to Section 108. This objection also in our opinion is not well-founded as it overlooks the fact that the power that was conferred on the High Court by Section 108 still subsists, and it has not been affected in any manner whatever either by the Government of India Act, 1935, or by the new Constitution. On the other hand, it has been kept alive and reaffirmed with great vigour by these statutes. The High Courts still enjoy the same unfettered power as they enjoyed under Section 108 of the Government of India Act, 1915, of making rules and providing whether an appeal has to be heard by one Judge or more Judges or by Division Courts consisting of two or more Judges of the High Court. It is immaterial by what label or nomenclature that power is described in the different statutes or in the Letters Patent. The power is there and continues to be there and can be exercised in the same manner as it could be exercised when it was originally conferred. As a matter of history the power was not conferred for the first time by Section 108 of the Government of India Act, 1915. It has already been conferred by Section 13 of the Indian High Courts Act of 1861. We are further of the opinion that the High Court was right in the view that reference in C1.15 to Section 108 should be read as a reference to the corresponding provisions of the 1935 Act and the Constitution. The canon of construction of statutes enunciated in Section 38 of the Interpretation Act and reiterated with some modification in S. 8 of the General Clauses Act is one of General application where statutes or Acts have to be construed and there is no reasonable ground for holding that the rule of construction should not be applied in construing the charters of the different High Court. These charters were granted under statutory powers and are subject to the legislative powers of the Indian Legislature.

'Assuming however, but not conceding, that strictly speaking the provisions of the Interpretation Act and the General Clauses Act do not for any reason apply, we see no jurisdiction for holding that the principles of construction enunciated in those provisions have no application for construing these charters. For the reasons given above we hold that the High court was perfectly justified in overruling the preliminary objection and in holding that an appeal was competent from the judgment of Mr. Justice Shah under C1.15 of the letters Patent.'

The Supreme Court overruled a judgment of the Calcutta High Court in Indian Electric Works v. Registrar of Trade Marks : AIR1947Cal49 and commented,

'On the line of thought adopted on the Calcutta decision that learned judges were forced to the conclusion which seems somewhat strange that the jurisdiction conferred by the Letter Patent on the Calcutta High Court is much more limited and restricted than has been conferred on some of the new High Courts in India by their Letters Patent.

It is thus clear from the judgment of the Supreme Court's rule making power under Section 108 of Government of India Act, 1915 read with the corresponding provision in the Government of India Act, 1935 and under Art 225 of the Constitution of India remained unaffected and so is the power of the Hon'ble the Chief Justice to decide who amongst the Judges be assigned the work as a Judge sitting alone or a Judge sitting in a Division Bench of two or three Judges.

71. The administration order passed by the Honourable the Chief Justice in withdrawing all these actions from the First Bench and posting them before a Division Bench, of which, he is not a member in the light of the principles evolved in the decisions referred to above and Rules 1-A and 2(4) of the Rules of the High Court, Madras, Appellate side, cannot at all be stated to be without jurisdiction.

72. We may now proceed to consider the other questions relatable to the right of appeal alleged to be vested in the petitions by Clause 15 of the Letters Patent being lost by the withdrawal of all these actions from a learned single Judge and posting them for final disposal before a Division Bench.

73. Clause 15 of the Letters Patent reads as under;

15. Appeal from the Courts of Original Jurisdiction to the High court in its appellate jurisdiction-- And we do further ordain that an appeal shall lie to the said High Court of Judicature at Madras from the judgment (not being a judgment passed in the exercise of appellate jurisdiction in respect of a decree or order in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court and not being an order made in the exercise of revisional jurisdiction and not being a sentence or order passed or made in the exercise of the power of superintendence under the provisions of the Section 107 of the Government of India Act or in the exercise of criminal jurisdiction) of one Judge of the said High Court or one Judge of any Division Court, pursuant to Section 108 of the Government of India Act, and that notwithstanding anything hereinbefore provided an appeal shall be to the said High Court from a judgment of one Judge of the said High Court of one Judge or any Division Court pursuant to Section 108 of the Government of India Act made (on or after the 1st day of February, 1929) in the exercise of the appellate jurisdiction by a Court subject to the superintendence of the said High Court, where the Judge who passed the judgment declares that the case is a fit one for appeal but that the right of appeal from other judgments of Judges of the said High Court or of such Division Court shall be to us, Our Heirs of Successor in Our or Their Privy Council as hereinafter provided.

74. A cursory perusal of what has been extracted above will indicate in crystal clear terms, the parameter prescribed for an appeal from a judgment. The right of appeal is there only when there is a judgment. In other words, Clause 15 is made applicable only when a judgments rendered by a learned single Judge and not until then. All these actions do not at all get fructified into a judgment before their withdrawal from a learned single Judge and posting them before a Division Bench. As such, the accrual of the right of appeal does not get matured. Paradoxical argument made in this regard may be highlighted thus. Does not a party lost the right of appeal in case of a reference by a learned single Judge? The petitioners bother only when the Honourable the Chief Justice constitutes the Bench about the alleged right of appeal being lost. Thus the hollowness and the utter untenability of the arguments projected in this regard gets exposed.

75. Thus, the twin questions posed for consideration relatable to the topic under discussion bristles next to nothing.

76. From the concomitant consequences flowing from our discussions supra, we hold that the impugned Legislation is a valid piece of Legislation in the sense of not suffering from any constitutional infirmity. The respondent-State of Tamil Nadu are therefore free to implement its provisions.

77. Irrespective of the procedural formalities or wrangles, all sorts of grounds-whether raised or not-had been allowed to be urged and therefore it is, we rather feel, no individual orders need be passed in respect of those petitions, which sought to raise additional grounds.

78. The interim orders made in the nature of stay, injunction, direction and what now, shall stand vacated and consequently, all the W.M.Ps with such a prayer, shall stand dismissed.

79. In fine, all the present actions-this batch of writ petitions ~ are dismissed. 'There shall however, be no order, in the circumstances, as to costs.

The Common Order of the Court was made by Janarthanam, J.

80 The moment the Common Order was passed in this batch of writ petitions, Mr. M.S. Subramaniam learned Counsel appearing for some of the petitioner prayed for oral leave to appeal to the Supreme Court.

81. We are not inclined to grant the leave so prayed for on the facts and in the circumstances of these cases. The reason is rather obvious. It is not as if, the questions-Constitutional or otherwise-urged for consideration now had not been considered earlier by the Apex Court of this country and the plain fact is that such questions had, in fact, been canvassed on occasions more than one before the Apex Court and the apex Court, in turn, in catena of decisions, answered all these questions, in a scintillating fashion, without giving any room for any doubt- Constitutional or otherwise.

82. In this view of the matter, we decline to grant the leave so prayed for.

Subject	Constitution;Motor Vehicles
Court	Chennai High Court
Decided On	Jul-29-1997
Case Number	W.P. No. 15960 of 1996 and etc.
Judge	Janarthanam and Natarajan, JJ.
Reported in	1997(3)CTC255
Acts	Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 - Sections 3, 3(1), 12, 15A and 19; Constitution of India - Articles 14, 226, 254, 255, 300A and 301 to 304; Central Act; Constitutional Law; Motor Vehicles Act, 1939; Madras High Court Appellate Side Rules, 1965 - Rules 1A and 2(4); Motor Vehicles (Amendment) Act, 1988
Appellant	R. Gandhi and anr.
Respondent	Union of India (Uoi) Rep. by the Ministry of Law Justice and Company Affairs and ors.
Appellant Advocate	R. Gandhi, ;K.M. Vijayan, Sr. Advs., ;K. Ravi, ;M. Palani, ;R. Janakiraman, ;M.S. Subramaniam, ;M. Sundar, ;G. Rajagopalan, ;V. Raghavachari, ;Mythili Srinivasan and ;R. Srinivas, Advs.
Respondent Advocate	K.V. Venkatapathi, Adv. General assisted by ;R. Viduthalai, Adv. and ;Thirugnansambandam, Additional Government Pleader
Cases Referred	Indian Electric Works v. Registrar of Trade Marks

R. Gandhi and anr. Vs. Union of India (Uoi) Rep. by the Ministry of Law Justice and Company Affairs and ors. - Court Judgment