TaxTMI 
TaxTMI 
2009 (1) TMI 790
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....ce with effect from October 1, 2001. The said Act which was enacted in exercise of powers under article 246 read with the entry 52 of List II of the Seventh Schedule to the Constitution of India had the following objects and reasons: "STATEMENT OF OBJECTS AND REASONS It has come to the notice of the Government that many bulk consumers such as tea companies, oil companies, etc., take recourse to inter-State purchase of several items required for their own consumption with a view to availing benefit of lower rate of tax under the Central Sales Tax Act. This practice deprives the State of a substantial amount of revenue. 2.. Further it is also observed that due to disparity in the rate of tax in different States, motor vehicles are purchased outside the State and then brought into the State for use. 3.. In order to curb such losses of revenue and thereby mobilize additional resources, the Government have decided to levy tax on entry of selected items, including motor vehicles, which are imported into Assam from other States for own use and consumption: The Bill seeks to achieve above objects." The Act of 2001 underwent several amendments commencing with the fi....
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....dify the said Schedule and also may vary the rates of tax of the goods specified in the Schedule and thereupon the said Schedule shall be deemed to have been amended accordingly, [deleted by Assam Entry Tax (Second Amendment) Act, 2005 with effect from May 12, 2005] ... 5.. Exemption from tax.-Notwithstanding anything contained in section 3 and section 4, and subject to production of documentary proof, no tax under this Act shall be levied in respect of the specified goods which are also subject to levy of taxes under the provisions of the Assam Value Added Tax Act, 2003- (i) if the sale of such specified goods inside the State, made by an importer are sales within the meaning of clause (43) of section 2 of the said Act, excepting sales falling under sub-clauses (ii), (iii) and (iv) of the said clause and if he is liable to pay tax on such sales as a registered dealer under the Assam Value Added Tax Act, 2003; (ii) if the sale of such specified goods is made by the importer in the course of inter-State trade or commerce or in the course of export out of the territory of India or such goods are otherwise dispatched outside the State by way of stock transfer and if he is ....
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....r section 3(4) of the impugned Act, as it stood till May 12, 2005, suffers from vice of excessive delegation of legislative functions? (vi) Whether omission of section 3(4) in the impugned Act, by the Second Amendment Act, with effect from May 12, 2005, saves the actions taken under the said provisions of law, prior to May 12, 2005? (vii) Whether the judgment passed would have prospective effect? (viii) Whether refund of tax paid is permissible?" By judgment and order dated August 30, 2007 the Division Bench answered the questions arising in the writ petitions in the following manner: (1) The Act of 2001 prior to its amendment made with effect from October 19, 2001 was held to be discriminatory but such defect was held to have been cured by the amendment of sections 2(b) and (d) made with effect from the said date, i.e., October 19, 2001. (2) The Division Bench held that the entry tax imposed by the Act of 2001 is not compensatory in nature and that the same imposes restrictions on the free trade and commerce guaranteed by article 301 of the Constitution. (3) The Division Bench further held that the levy not being compensatory in nature, though the principa....
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....astructure for supply of electrical energy, water supply and sanitation and other infrastructure for furtherance of trade or commerce and intercourse. (c) Any other purpose connected with the development of trade and commerce and facilities relating thereto. (d) Providing finance, aid, grants and subsidies to local bodies and Government agencies for the aforesaid purposes. The Bill also seeks to transfer the proceeds of entry tax already collected under the Assam Entry Tax Act, 2001, after deducting therefrom the sum already utilised for aforesaid purposes, to the Assam Trade Development Fund and utilize this amount for the aforesaid purposes. Further, the Bill seeks to repeal the Assam Entry Tax Act, 2001. It seeks to save the actions already taken under the Assam Entry Tax Act, 2001." The aforesaid Bill was passed by the State Legislature and received the assent of the honourable Governor on April 13, 2008. Thereafter, in exercise of the powers under section 1(3), the Governor of Assam has been pleased to appoint June 1, 2008 as the date on which the aforesaid Act was to come into force. It may be noticed, at this stage, that by the Assam Entry Tax (Amendment) Ordinan....
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....on, use or sale therein and includes,- (i) every person who carries on the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (ii) every person who carries on business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. Explanation.-In case of any goods specified in the Schedule, which is transported through pipelines into a local area, the ultimate recipient of the goods in the local area shall be deemed to be the importer; (g) 'Local area' means any area of the State within the limits of any local authority including any area under- (i) Municipal Corporation of Guwahati, constituted under the Guwahati Municipal Corporation Act, 1969 (Assam Act I of 1973); or (ii) Municipality or Town Committee constituted under the Assam Municipal Act, 1956 (Assam Act 15 of 1957); or (iii) Gaon Panchayat or an Anchalik Panchayat or a Zilla Parishad constituted under the Assam Panchayat Act, 1994 (Assam Act 18 of 1994); or (iv) North Cachar Hills Autonomous Council or Karbi Ang....
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.... provisions of this Act. (3) Where the specified goods, the sales of which are exempted under the Assam Value Added Tax Act, 2003 (Assam Act 8 of 2003) for reasons of such goods being included in the First Schedule to the said Act, which after entry into a local area are sold by an importer in the course of inter-State trade or commerce or in the course of export out of the territory of India or are dispatched outside the State by way of stock transfer, the import value of such specified goods subsequently sold or sent out in the manner mentioned above shall, subject to production of proof, be deducted from the total import value to determine the taxable import value. (4) The State Government may, by notification in the Official Gazette, in the public interest or taking into account the infrastructure and amenities provided or to be provided to facilitate trade and commerce, vary the rates of tax of the specified goods and on such notification being issued, the Schedule shall be deemed to have been amended accordingly: Provided that the rate of tax to be specified or varied by the State Government in respect of any such goods shall not exceed twenty percentum." "10. Uti....
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.... suit or other proceeding shall be maintained or continued in, or before any court, Tribunal or other authority for the refund of any amount received or realised by way of such tax; (b) no court, Tribunal or other authority shall enforce any decree or order directing the refund of any amount received or realised by way of such tax; (c) any proceeding, act or thing which could have been validly taken, continued or done for the levy or collection of such tax at any time under the provisions of the said Act but which had not been taken, continued or done, may be taken, continued or done." "13. Repeal and saving.-(1) The Assam Entry Tax Act, 2001 (Assam Act 4 of 2001) is hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken under the Act so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act, as if this Act were in force at all material times." The following provisions of the Assam Entry Tax Rules, 2008 as framed in exercise of the rule-making power vested by section 11 of the Act may also be noticed. "11. Administration of Assam Trade Development Fund.-(1) The tax shall be deposited i....
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....he court. In this regard, specifically, the validity of the Ordinance, which has the effect of making items taxable with effect from October 1, 2001, though introduced in the Schedule to the Act of 2001 with effect from subsequent dates, would be a co-incidental question that would require an answer from the court. Dr. AK Saraf, learned Senior Counsel appearing for the writ petitioners in a group of cases including W.P.(C) No. 2452 of 2008 wherein the issue concerning the extended meaning of the expression "importer" is involved, had offered the lead argument in the case. Dr. Saraf has argued that in so far as the crude oil transported through pipelines is concerned, the petitioner in W.P.(C) No. 2452 of 2008, is the mere recipient of the said crude oil at the refinery point. The pipelines have been laid by the Oil and Natural Gas Commission and the Oil India Limited (hereinafter referred to as "the ONGC" and "OIL") which organizations are responsible for maintenance and upkeep and security of the pipelines. The crude oil is transported by the said organizations to the refineries owned by the petitioner in W.P.(C) No. 2452 of 2008. The said petitioner is in no way connected with....
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....ons as directly and immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301..." Citing another Constitution Bench judgment in the case of Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406, Dr. Saraf has submitted that in the aforesaid judgment the concept of regulatory measure or compensatory tax was evolved to take out such a measure from the requirement contained in the proviso to article 304(b) of the Constitution. The following observation of the apex court has been particularly stressed upon by Dr. Saraf to contend that taxing provision to be compensatory must conform to the requirement spelt out by the apex court: "...Whether a tax is compensatory or not cannot be made to depend on the preamble of the statute imposing it. Nor do we think that it would be right to say that a tax is not compensatory because the precise or specific amount collected is not actually used in providing any facilities. It is obvious that if the preamble decided the matter, then the mercantile community ....
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....n the above context, Dr. Saraf has drawn the attention of the court to the provisions of section 10 of the Act of 2008 on the basis of which the State would like the court to understand that the levy, indeed, is compensatory. However, according to Dr. Saraf, what is contemplated by the provision of section 10 of the Act lie within the parameters of the general duties of the State, which, it is, otherwise obliged to provide and perform. Therefore, according to Dr. Saraf, the Act of 2008 does not facially show any quantifiable benefit to the tax-payer as a recompense for what is being provided. Consequently, according to the learned counsel, one of the cardinal tests laid down in Jindal Stainless Ltd. [2006] 145 STC 544 (SC); [2006] 7 SCC 241 is not met in the present case. Furthermore, according to Dr. Saraf, though in terms of the law laid down in Jindal Stainless Ltd. [2006] 145 STC 544 (SC); [2006] 7 SCC 241, it is open for the State to lay before the court positive materials to show what facility is being provided to the tax-payer no such materials have been forthcoming in any of the affidavits filed in the present case. Rather, according to Dr. Saraf, the facts stated in the af....
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....r. Saraf has argued that the Ordinance of 2008 has been issued in colourable exercise of powers and is contrary to the proviso to article 304(b) of the Constitution. Dr. Saraf, learned Senior Counsel for the petitioner, has also questioned the necessity of the Ordinance at the point of time it came to be issued as well as the satisfaction therefor. The arguments advanced by Dr. Saraf, learned Senior Counsel for the petitioner have been largely adopted by Sri G.N. Sahewalla, Sri G.K. Joshi and Dr. B.P. Todi, learned counsel appearing for some of the writ petitioners. While Dr. Todi has specifically argued that section 3(2)(ii) of the Act is contrary to article 286 of the Constitution, Sri G.N. Sahewalla and Sri G.K. Joshi, learned Senior Counsel for the petitioners have drawn the attention of the court to the different dates with effect from which the various items in the Schedule to the Act of 2008 were included in the Schedule to the Act of 2001. On the said basis, learned counsel have additionally urged that the Ordinance of 2008, amending section 1(3) of the Act of 2008 to be invalid. As already noticed by the Ordinance of 2008, the Act of 2008 has been made effective from Oc....
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....ed the legal remedies of a payer of entry tax, which has been adjudged to be illegally levied. In this regard Sri Dutta has also pointed out that the Division Bench of this court having already directed for consideration of claims of refund, the payers of the tax, illegally collected, have a remedy by way of a civil action against such order that may be passed in the refund proceedings. The Act of 2008 having barred a civil suit, according to Sri Dutta, is repugnant to the provisions of a Central enactment, i.e., the Code of Civil Procedure. Learned counsel for the petitioners have also relied on the decisions of several High Courts in cases involving the validity of the provisions of the Entry Tax Act applicable in those States. In particular, reference has been made to the decision of the Jharkhand High Court in Tata Iron & Steel Company Ltd. v. State of Jharkhand [2007] 6 VST 587, the decision of the Kerala High Court in Thressiamma L. Chirayil v. State of Kerala [2007] 7 VST 293, the decision of the Madras High Court in ITC Limited v. State of Tamil Nadu [2007] 7 VST 367 besides the decision of the Allahabad High Court in Indian Oil Corporation Limited v. State of Uttar Prad....
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....e basis of the materials available before the Division Bench, a conclusion was reached that the State had not furnished detailed particulars of the infrastructure facilities provided for or intended to be provided to substantiate the stand taken that the impugned levy is compensatory in nature. Sri Choudhury has also submitted that the provisions for infrastructure facilities like laying of roads and maintenance thereof, as pleaded by the State in its affidavit before the Division Bench in W.A. No. 462 of 2006 State of Assam v. Chhotabhai Jethabhai Patel Tobacco Products Co. Ltd. [2008] 15 VST 70 (Gauhati). and other connected cases, were held to be relatable to the sovereign functions of the State which facilities the State is bound to provide irrespective of the fact whether any entry tax is levied or not. Sri Choudhury has further pointed out that the court also took note of the fact that under section 8A of the Act the State Government had been empowered to spend such amount of the tax collected for the purpose of development of trading facilities, maintenance of road and other infrastructure facilities in the local (1)State of Assam v. Chhotabhai Jethabhai Patel Tobacco Pro....
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....regard, Sri Choudhury has submitted that the proceeds of the entry tax are to be credited and appropriated to a special fund and is to be utilised for the development of infrastructure and for making of provisions for amenities to facilitate trade, commerce and intercourse in the specific areas enumerated in section 10(1)(a) to 10(1)(d). Sri Choudhury has further pointed out that under section 10(2) the amount realised as entry tax is not to be used for any other purpose than those specified in section 10(1)(a) to 10(1)(d). Furthermore, all proceeds of entry tax collected under Act of 2001 are to be transferred to a special fund. Pointing out the provisions of rule 11 of the Rules, the learned Additional Advocate-General has drawn the attention of the court to the creation of a special fund, i.e., Assam Trade Development Fund into which the amount collected by way of entry tax is to be deposited under a separate, distinct and exclusive head of accounts. Referring to the affidavit dated August 8, 2008 filed by the respondents, Sri Choudhury has pointed out that in the budget for the year 2008-09 a sum of Rs. 250 crores has been earmarked for development of infrastructure to facil....
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.... 8 SCC 669, wherein in paragraph 20 the apex court has taken the view that a validating legislation altering the basis of the law can be retrospective. However, Sri Choudhury, learned Additional Advocate-General, has submitted that in so far as the Ordinance making all items of the Schedule to the Act of 2008 retrospective in operation from October 1, 2001 is concerned, such retrospectivity should be with effect from the dates from which such items were brought into the Schedule to the Act of 2001 and therefore the provisions of the Ordinance in this regard may be suitably read down by the court instead of invalidating the same on the aforesaid count. Continuing, Sri Choudhury, learned Additional Advocate-General, has placed reliance on the decision of the apex court in G.K. Krishnan v. State of Tamil Nadu reported in [1975] 1 SCC 375, particularly the observations contained in paragraph 17 of the judgment in the said case to contend that users of vehicles who stand in a special and direct relation to roads may be called upon to make a special contribution for the maintenance of such roads over and above the general contribution as tax-payers of the State. Referring to anothe....
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....rnataka reported in [2005] 4 SCC 64, wherein different rates of entry tax on vehicles either on the purchase value or the cost of the vehicle were held by the apex court not to be adverse to the regulatory/compensatory nature of the levy. On the aforesaid basis, Sri Choudhury, learned Additional AdvocateGeneral, has argued that merely because entry tax has been levied ad valorem by the Act of 2008 it cannot be said that said levy is not compensatory. Insofar as the contention of Dr. Saraf, learned counsel for the petitioners with regard to section 3(2)(ii) of the Act of 2008 is concerned, Sri Choudhury, learned Additional Advocate-General, has urged that article 286 of the Constitution has no application in respect of entry of goods into a local area for purposes of sale, consumption or use therein to which situation it is the provisions contained in Part XIII of the Constitution which alone will apply. The validity of any fiscal legislation in respect of entry of goods into a local area for the purpose enumerated above will have to be decided on anvil of the provision of Part XIII of the Constitution and not by reference to article 286. In this regard, Sri Choudhury has refe....
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....to a local area has been included within the ambit of the said definition. The power of the Legislature to make the recipient of the crude oil, i.e., the petitioner, an importer under the Act by means of a deeming provision has to be conceded. As observed in J.K. Cotton Spinning and Weaving Mills Ltd. v. Union of India [1988] 68 STC 421 (SC); [1987] Suppl. SCC 350 (page 438 of STC)"...The Legislature is quite competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not really exist...". The deeming provision contained in the Explanation to section 2(1)(e) of the Act also appears to be consistent with the provisions of the Act, which seeks to impose the levy on a person who is responsible for the entry of specified goods into a local area, which, in the case of goods transported through pipelines, can also be reasonably understood to be the recipient of crude oil, i.e., the refinery owned by the petitioner in W.P. (C) No. 2452 of 2008. Furthermore, in the affidavit dated August 8, 2008 filed by the State, it has been stated that expenses are incurred by the State for providing security to the pipelines. The pipelines, however, according t....
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....ion of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the Legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralize the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the Legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a valida....
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....lenge against the Ordinance is primarily on grounds of expediency and necessity thereof, which questions the court cannot enter into. Another ground of challenge against the Ordinance is that it violates the requirement of the proviso to article 304(b) of the Constitution-a question that is inter-linked with the issue that remains to be adjudicated, i.e., whether the Act itself is compensatory or not. The only other objection of the petitioners as against the Ordinance which has some bearing and relevance is that the retrospective effect sought to be given to the Act of 2008 from October 1, 2001 would have the effect of making certain items to the Schedule of the Act of 2008 taxable from a point of time anterior to the inclusion of the said items in the Schedule to the Act of 2001. While no precedent needs to be cited for expressing the view that a validating statute more often than not, has to be retrospective in operation, the effect and legal consequences of such retrospective operation, as pointed out by the petitioners above, would not require the consideration of the court in view of the stand taken on behalf of the State that it was not the intention of the Legislature to....
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....y in nature, its validity will not depend on the fulfilment of the requirements contemplated by the proviso to article 304(b) of the Constitution. In the said judgment the apex court also laid down a working test whether a levy is compensatory or not in the following terms: "...a working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities." The above law declared in Automobile Transport (Rajasthan) Ltd. AIR 1962 SC 1406 came to be continuously applied to decide whether a levy is compensatory or not. However, in two decisions of the apex court, i.e., Bhagatram Rajeev Kumar v. Commissioner of Sales Tax [1995] 96 STC 654; [1995] Supp. 1 SCC 673 and in State of Bihar v. Bihar Chamber of Commerce [1996] 103 STC 1; [1996] 9 SCC 136 a somewhat broader proposition of "some link between the tax and the facilities extended..." was understood to have been laid down by the apex court. The aforesaid broader proposition came to be noticed in Jindal Stripe Ltd. v. State of Haryana [20....
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.... 41, 42, 43, 44, 45, 49, 50, 52 and 53 of the judgment (paragraphs 36, 37, 38, 39, 40, 41, 42, 46, 47, 49 and 50 in STC): "39. As stated above, in order to lay down the parameters of a compensatory tax, we must know the concept of taxing power. 40.. Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the tax-payer to pay. The principle behind the levy of a tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the States' action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc., but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden. 41.. On the other hand, a fee is based on the 'principle of equivalence'. This principle is the converse of the 'principle of ability' to pay. In the ....
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....dvantage, it is only fair to the community at large that the beneficiary shall pay for it. The basic difference between a tax on one hand and a fee/compensatory tax on the other hand is that the former is based on the concept of burden whereas compensatory tax/fee is based on the concept of recompense/reimbursement. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which has to be reimbursed by compensatory tax or in the form of compensatory tax. In other words, compensatory tax is a recompense/ reimbursement. 43.. In the context of article 301, therefore, compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the costs of regulation or to meet the outlay incurred for some special advantage to trade, commerce and intercourse. It may incidentally bring in net-revenue to the Government but that circumstance is not an essential ingredient of compensatory tax. 44.. Since compensatory tax is a judicially evolved concept, understanding of the concept, as discussed above, indicates its parameters. 45.. To sum up, the ba....
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.... of compensatory tax. We may reiterate that when a tax is imposed in the regulation or as a part of regulatory measure the controlling factor of the levy shifts from burden to reimbursement/recompense. The working test propounded by a Bench of seven judges in the case of Automobile Transport [1963] 1 SCR 491; AIR 1962 SC 1406 and the test of 'some connection' enunciated by a Bench of three judges in Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 cannot stand together. Therefore, in our view, the test of 'some connection' as propounded in Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 is not applicable to the concept of compensatory tax and accordingly to that extent, the judgments of this Court in Bhagatram Rajeev Kumar v. Commissioner of Sales Tax [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 and State of Bihar v. Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 stand overruled. Conclusion: 52.. In our opinion, the doubt expressed by the referring Bench about the correctness of the decision in Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 followed by the judgment in the case Bihar Chamber of Com....
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....ial fund, i.e., the Assam Trade Development Fund for exclusive utilization for development of infrastructure and provisions for amenities to facilitate trade, commerce and intercourse including the specific fields mentioned in section 10(1)(a) to (d). Section 10(2) provides that the amounts realised as entry tax will not be used for any other purpose except those specified under sub-section (1). The affidavit dated August 8, 2008 filed by the State indicates that for the current financial year, i.e., 2008-09 a sum of Rs. 250 crore has been earmarked for credit to the special fund. Out of the said amount of Rs. 250 crore diverse amounts have been earmarked for different Departments connected with the development of infrastructure and making of provisions for amenities to facilitate trade, commerce and intercourse. The affidavit further indicates that a committee for administration of the special fund has been constituted on July 24, 2008, which committee has been entrusted with the task of examination of proposals to be submitted by the concerned departments with regard to development of infrastructure and thereafter for sanction and release of funds. The Budget speech of the hon....
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.... to the special fund created, the funds earmarked for infrastructure development and provisions for amenities to different departments and the constitution of a committee to examine the developmental schemes and to sanction and allocate funds, which materials have been placed in the affidavit dated August 8, 2008, are further pointers that should enable the levy to partake of the character of being compensatory in nature. While it is correct that the development of infrastructure and provision of amenities may also benefit persons other than the payers of entry tax, the said fact, by itself, will not affect the compensatory nature of the levy, inasmuch as, it is not a requirement, such a situation being impossible, that the levy of entry tax should bring benefit only to those from whom the tax is collected. Strenuous arguments have been offered on behalf of the petitioners that section 10 of the Act of 2008 enumerates different fields of developmental activity which, even otherwise, fall within the general duties and responsibilities of a sovereign State. Laying of roads and maintenance thereof; provisions for electricity, sanitation, water supply, etc., covered by section 10(1)....
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....actual use made of the physical facilities provided in the shape of a road. The difficulties are very great in defining this conception. But the conception appears to be based on a real distinction between remuneration for the provision of a specific physical service of which particular use is made and the burden placed upon transportation in aid of the general expenditure of the State. It is clear that the motor vehicles require, for their safe, efficient and economical use, roads of considerable width, hardness and durability; the maintenance of such road will cost the Government money. But, because the users of vehicles generally, and of public motor vehicles in particular, stand in a special and direct relation to such roads, and may be said to derive a special and direct benefit from them, it seems not unreasonable that they should be called upon to make a special contribution to their maintenance over and above their general contribution as tax-payers of the State. (emphasis is ours), If, however, a charge is imposed, not for the purpose of obtaining a proper contribution to the maintenance and upkeep of the road, but for the purpose of adversely affecting trade or commerc....
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....re therefor, unless such rate can be held to be confiscatory, which plea has not even been advanced, the levy in question cannot be adjudged to be unconstitutional on the ground urged. There is also no good reason why the court should feel inclined to accept the argument that the Act of 2008 having permitted the use of the amount of entry tax collected from one local area for the development of another local area, the said Act should be held to be invalid on the said ground. The argument overlooks the facts stated in the affidavit of the State wherein the steps taken for effective implementation of the Act of 2008 have been delineated, i.e., constitution of a special fund ; allocation of funds to different Departments as well as the constitution of the committee to examine proposals for development of infrastructure and to sanction and release funds. The argument also overlooks the stated purpose of the enactment in question, i.e., to facilitate trade, commerce and intercourse by making provisions for infrastructural development as well as the provisions for amenities. If the Act is otherwise within the competence of the State Legislature and is compensatory in nature, there ....