State toll levy upheld as a valid tax; Union vesting of the highway did not remove taxing power.

Statutory vesting of a national highway in the Union for control and management did not divest the State of ownership or its power to levy tolls, and the State toll law was not impliedly repealed. The levy was characterised as a toll and therefore a tax, not a fee, so no quid pro quo or special service was required. It was also held not to restrain inter-State trade or commerce, and Articles 301 and 304 were not violated. The State's toll levy on use of the road was upheld as a valid exercise of taxing power.

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Issues: (i) Whether the levy of toll on the national highway became invalid because the highway vested in the Union under the National Highways Act and the subject was thereby taken out of State competence. (ii) Whether the impugned levy was a fee requiring quid pro quo or a tax within the State's taxing power, and whether it offended Articles 301 and 304 of the Constitution of India.

Issue (i): Whether the levy of toll on the national highway became invalid because the highway vested in the Union under the National Highways Act and the subject was thereby taken out of State competence.

Analysis: Entry 23 of List I was held to relate to legislation on national highways, but the power to levy tolls was treated as falling within Entry 59 of List II. The word "vest" in the National Highways Act was construed as conferring control and management for highway purposes, not as transferring the ownership of the soil or abrogating the State's title. The National Highways Act was also held not to impliedly repeal the State toll law.

Conclusion: The levy did not cease to be within State competence and remained valid.

Issue (ii): Whether the impugned levy was a fee requiring quid pro quo or a tax within the State's taxing power, and whether it offended Articles 301 and 304 of the Constitution of India.

Analysis: The levy was characterised as a toll, that is, a tax and not a fee. A tax does not depend on quid pro quo, whereas a fee is linked to a special service or benefit. The Court held that no special service by the State was necessary for a toll imposed for use of the road. The levy was also held not to be a restriction on inter-State trade and commerce, and therefore Articles 301 and 304 were not violated.

Conclusion: The levy was held to be a valid tax and not unconstitutional under Articles 301 and 304.

Final Conclusion: The writ petition failed because the State's toll levy on the highway was upheld as a valid exercise of taxing power and the challenge based on Union vesting and constitutional repugnancy was rejected.

Ratio Decidendi: Statutory vesting of a highway for purposes of control and maintenance does not divest the State of ownership or its power to levy tolls, and a toll imposed for use of the road is a tax not requiring quid pro quo.

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