AI Drafter 
TaxTMI 
TaxTMI 
1969 (8) TMI 88
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the appellants involve the question of the constitutionality of the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods Amendment and Validation) Act, 1961, Andhra Pradesh Act XXXIV of 19 61. The appellants hold permits either for stage carriage or for public. carriers issued under the Motor Vehicles Act, 1939. They ply these vehicles on different routes in the State as also on some of the inter-State routes. They were subject to tax levied under the Madras Motor Vehicle Taxation Act, 1931. 1952 the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 (Act XVI of 1952) was enacted by which every operator had to pay Rs. 12.50 per seat per quarter or 37 naye paise per seat per mile over and above the tax pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act imposed a restriction on the operators' freedom of trade and commerce under Art. 301 of the Constitution the previous sanction of the President was necessary under the proviso to Art. 304(b) and because that had not been obtained the Act was legally inoperative: Venson Transport v. The State of Andhra Pradesh ([1961] I. An. W.R. 351.). Subsequently Act 34 of 1961 was enacted after the sanction of the President was obtained to the Bill under the proviso to Art. 304(b). It validated two acts, namely, Act 21 of 1959 and Act 22 of 1959 and also amended Act 16 of 1952 and substituted sub-s. (3) of s. 3 of that Act by a new sub-section. It further validated the realisation of the tax paid or payable and the fee paid or payable and other ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Art. 304(b) also came up for consideration. The High Court, in the light of the facts and figures placed before it, held that the increase in surcharge of the fares and freights contemplated by the impugned Act did not constitute an impediment to the trade of the transporters and that the restriction in the shape of additional imposts was not unreasonable. It is unnecessary to refer to the other points agitated before and decided by the High Court. Counsel for the, appellant has urged the following points before us: (1) The impugned Act imposed a tax for augmenting the revenues of the State. It was neither regulatory nor compensatory in nature and it fell directly within the mischief of Art. 301 of the Constitution. (2) Even thoug....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tea Co. Ltd. v. The State of Assam & Others([1961] 1 S.C.R. 809. ) with regard to the scope and effect of the provisions of Art. 304(b) was noticed . It was observed that according to the majority view expressed in Atiabari Tea Co. case([1961] 1 S.C.R. 809. ) if the Act is passed under Art. 304(b) and its validity is impeached the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in public interest and in doing so it may rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan)([1963] 2' S.C.R. 491.) case compensatory taxation would be outside Art. 301 and can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rden which had been imposed and the transporters would suffer heavy losses if the tax as increased by the impugned legislation were to be realized. The High Court referred to the computation of the income by the Income tax department of some of the transporters in whose assessments the income in regard to each bus had been calculated at a figure of Rs. 7,000/- annually, which showed that the profits were much higher than Rs. 2,000/-. It was not disputed before the High Court that the transporters had been permitted to enhance the fares. If the fares could be enhanced it was obvious that the burden would not fail on the transporters. It was urged that owing to competition from the railways and from operators whose vehicles had been regist....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would be diminished or greatly reduced it cannot be held that there is any infringement of Art. 19(1)(g). Coming to the attack on the ground of violation of Art. reference may be made to the background relating to taxation of passengers and goods carried in motor vehicles in the State prior to the formation of Andhra Pradesh. It appears that there was no law in the erstwhile Hyderabad State imposing any tax on passengers and goods. After the merger of Telengana and Andhra areas the laws in operation in the Telengana region continued to remain in force by virtue of the provisions of s. 119 of the States Reorganization Act, 1956. By Act X of 1958 the State of Andhra Pradesh amended Act XVI of 1952 inter alia extending that to the Telengana ar....