# M. Bhagat v. The Tncome-tax

- **Citation:** [1962] 1 S.C.R. 517
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** S. K. Das, J. L. Kapur, M. HIDAYA'fULLAH, J. c. SHAH, T. L. Venkatarama Aiyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-bhagat-v-the-tncome-tax-2143
- **Pages:** 14

## Headnote

Tax-Levied on passengers and goods carried by road in motor
vehicles-Lump sum in lieu of tax optionally payable under the Act
but mandatory undu the Rules,and notification-The word "shall",
if mandatory or directory-Discrimination, if any between.operators
using roads-Rajasthan Passengers and Goods Taxation Act, r959
(I8 of r959), ss. 3, 4-Rajasthan Passengers and Goods Taxation
Rules, r959, rr. 8, 8-A, Notification issued under r. 8-Constitution
of India, Sch. VJ[, State List, Entry 56.
The petitioners who were partners of a registered firm holding public carrier and stage carriage permits challenged the
constitutionality of certain provisions of the Rajasthan Passengers and Goods Taxation Act, 1959. the Rajasthan Passengers and
Goods Taxation Rules, 1959. and a notification issued under r. 8.
The Act was passed for levying a tax on passenghs and goods
lt1ar(;h 22.
518
SUPREME COURT REPORTS
[1962]
z96z
carried by road in motor vehicles the power to enact being
derived from Entry 56 of the State List in Sch. VII of the ConsSainih Motors,
titution. Section 3(4) of the Act prescribed the method of
]odhpur & Others collection of the tax and provided that the State Government
v.
. "may accept a lump sum in lieu of the tax chargeable". Rule 8(1)
The State of
prescribed the method of payment and provided that the tax
Rajasthan
"shall be paid in lump sum" and the notification in question
prescribed the rates of the tax.
Held, that the incidence of the tax was upon "passengers
and goods" and not upon income of the petitioners though the
amount of the tax was measured by the fares and freights. The
charging section, namely, s. 3 did not go outside Entry 56.
Mathurai v. State of Madras, I.L.R. (1954) Mad. 867, Atma
Ram Budhia v. State of Bihar, (1952) I.L.R. 31 Pat. 493, referred
to.
The tax did not offend Arts. 301 and 304 of the Constitution
and no inter-State trade, commerce or intercourse was affected
by it. Although the tax fell upon passengers and goods proceeding to or from an extra-State point, it was limited only to
the fare and freight proportionate to the route within the State.
The word "shall" is ordinarily mandatory but it is sometimes interpreted as directory, and in the present case the word
"shall" used in rr. 8 and SA and the notification should be
interpreted as directory as s. 14 of the Act from which the
Rules and the notification derive their authority, creates an
option by using the words "may accept". The Act, the Rules
and the notification must be read harmoniously. The mandatory
language was used to fix peremptorily the amount of the lump
sum if paid in lieu of the tax.
In Re Lord Thurlow Ex Parte Official Receiver, (1895) 1 Q.B.
724, Mannikam Patter v. Nanchappa Chettiar, (1928) M.W.N. 441,
In re Rustom, [1901] I.LR. 26 Born. 369, ]etliaji Peraji Firm v.
Krishnayya, (1929) I.L.R. 52 Mad. 648 and Burjore and Bhavani
Pershad v. Mussumat Bhagana, (1883) L.R. II I.A. 7, followed.
The lump sum figure was based on averages and could not be
impeached by reference to a possibility that on some days no
business might be done.
Comparison with Railways· which is a union subject \Vas not
admissitile.
There was no discri1nination between operators of
public motor vehicles using roads all of whom were affected by
the Act. There could be no comparison between persons using
better kind of roads and those using roads which were not so
good.
All operators using better kind of roads had to pay
heavier tax, and there was no discrimination between them as a
class.
ORIGINAL JURISDICTION:
Petition No. 82 of 1959.
Petition under Art. 32 of the Constitution of India
for enforcement of Fundamental Rights.
J
1 s.c.R. SUPREME COURT REPORTS
519
S. K. Kapur, Jai Gopal Chagnani, K. K. Jain and
B. P. Maheshwari, for the petitioners.
Sainik Motors,
C. K. Daphtary, Solicitor-General of India, G. C. fodhpu. & Others
Kasliwal, Advocate-General, Rajasthan and D. Gupta,
v.
for the respondent.
n, Sta"
01
Rajasthan
1961.
March 22. The Judgment of t

## Text

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1 S.C.R. SUPREME COURT REPORTS
517
Clauses Act. But there is sufficient indication in s. 138
itself that the amounts recovered as surcharge were to
form part of the Revenues of the Federation and
such Revenues were to be expended for the purposes
there indicated. Under s. 124(4) of the Government
of India Act, 1935, where powers and duties are conferred by s. 124 upon a Province or a Federated State
there shall be paid by the Federation to the Province
or the Federated State such sum as may be agreed
........................... Hence by the definitions given in
the General Clauses Act no different concept of the
words "purposes of the Central Government" was
intended from what was intended by the use of the
words "Federal purposes" in s. 138(1 )(b) of the Government of India Act, 1935.
These petitions therefore fail and are dismissed with
costs. One hearing fee.
Petitions dismissed.
z96 r
A bdullabhai
M. Bhagat
v.
The Tncome-tax
Officer, Special
Circle, Madras
Kapur J,
M/s. SAINIK MOTORS, JODHPUR AND OTHERS
z96z
v.
THE STATE OF RAJASTHAN
(S. K. DAS, J. L. KAPUR, M. HIDAYA'fULLAH,
J. c. SHAH and T. L. VENKATARAMA AIYAR, JJ.)
Tax-Levied on passengers and goods carried by road in motor
vehicles-Lump sum in lieu of tax optionally payable under the Act
but mandatory undu the Rules,and notification-The word "shall",
if mandatory or directory-Discrimination, if any between.operators
using roads-Rajasthan Passengers and Goods Taxation Act, r959
(I8 of r959), ss. 3, 4-Rajasthan Passengers and Goods Taxation
Rules, r959, rr. 8, 8-A, Notification issued under r. 8-Constitution
of India, Sch. VJ[, State List, Entry 56.
The petitioners who were partners of a registered firm holding public carrier and stage carriage permits challenged the
constitutionality of certain provisions of the Rajasthan Passengers and Goods Taxation Act, 1959. the Rajasthan Passengers and
Goods Taxation Rules, 1959. and a notification issued under r. 8.
The Act was passed for levying a tax on passenghs and goods
lt1ar(;h 22.
518
SUPREME COURT REPORTS
[1962]
z96z
carried by road in motor vehicles the power to enact being
derived from Entry 56 of the State List in Sch. VII of the ConsSainih Motors,
titution. Section 3(4) of the Act prescribed the method of
]odhpur & Others collection of the tax and provided that the State Government
v.
. "may accept a lump sum in lieu of the tax chargeable". Rule 8(1)
The State of
prescribed the method of payment and provided that the tax
Rajasthan
"shall be paid in lump sum" and the notification in question
prescribed the rates of the tax.
Held, that the incidence of the tax was upon "passengers
and goods" and not upon income of the petitioners though the
amount of the tax was measured by the fares and freights. The
charging section, namely, s. 3 did not go outside Entry 56.
Mathurai v. State of Madras, I.L.R. (1954) Mad. 867, Atma
Ram Budhia v. State of Bihar, (1952) I.L.R. 31 Pat. 493, referred
to.
The tax did not offend Arts. 301 and 304 of the Constitution
and no inter-State trade, commerce or intercourse was affected
by it. Although the tax fell upon passengers and goods proceeding to or from an extra-State point, it was limited only to
the fare and freight proportionate to the route within the State.
The word "shall" is ordinarily mandatory but it is sometimes interpreted as directory, and in the present case the word
"shall" used in rr. 8 and SA and the notification should be
interpreted as directory as s. 14 of the Act from which the
Rules and the notification derive their authority, creates an
option by using the words "may accept". The Act, the Rules
and the notification must be read harmoniously. The mandatory
language was used to fix peremptorily the amount of the lump
sum if paid in lieu of the tax.
In Re Lord Thurlow Ex Parte Official Receiver, (1895) 1 Q.B.
724, Mannikam Patter v. Nanchappa Chettiar, (1928) M.W.N. 441,
In re Rustom, [1901] I.LR. 26 Born. 369, ]etliaji Peraji Firm v.
Krishnayya, (1929) I.L.R. 52 Mad. 648 and Burjore and Bhavani
Pershad v. Mussumat Bhagana, (1883) L.R. II I.A. 7, followed.
The lump sum figure was based on averages and could not be
impeached by reference to a possibility that on some days no
business might be done.
Comparison with Railways· which is a union subject \Vas not
admissitile.
There was no discri1nination between operators of
public motor vehicles using roads all of whom were affected by
the Act. There could be no comparison between persons using
better kind of roads and those using roads which were not so
good.
All operators using better kind of roads had to pay
heavier tax, and there was no discrimination between them as a
class.
ORIGINAL JURISDICTION:
Petition No. 82 of 1959.
Petition under Art. 32 of the Constitution of India
for enforcement of Fundamental Rights.
J
1 s.c.R. SUPREME COURT REPORTS
519
S. K. Kapur, Jai Gopal Chagnani, K. K. Jain and
B. P. Maheshwari, for the petitioners.
Sainik Motors,
C. K. Daphtary, Solicitor-General of India, G. C. fodhpu. & Others
Kasliwal, Advocate-General, Rajasthan and D. Gupta,
v.
for the respondent.
n, Sta"
01
Rajasthan
1961.
March 22. The Judgment of the Court was
delivered by
Hidayatullah ].
HIDAYATULLAH, J.-This is a petition under Art. 32
of the Constitution. The petitioners, who are seven
in number, challenge as unconstitutional and ultra
vires certain provisions of the Rajasthan Passengers
and Goods Taxation Act, 1959, the Rajasthan Passengers and Goods Taxation Rules, 1959, and a notification issued under R. 8.
For brevity, we will refer to
them in this judgment, as the Act, the Rules and the
notification respectively. The first petitioner is a
registered firm, petitioners Nos. 2 to 6 are the partners of that firm, and petitioner No. 7 is the General
Manager of the firm.
Petitioner No. 7 holds a public
carrier permit for the whole of Rajasthan in his
individual name. The petitioners also hold 59 stage
carriage permits from the Regional Transport Authority, Jodhpur, for diverse routes over roads which have
different kinds of surfaces, some being sandy or katcha
and others, metalled, tarred, etc.
The Act was· passed in 1959 for levying a tax on
passengers and goods carried by road in motor vehicles.
The power to enact the Act purports to be derived from Entry No. 56 of the State List in Sch. VII
to the Constitution, which reads:
"56. Taxes on goods and passengers carried by
road or on inland waterways."
The Act received the assent of the President on April
27, 1959, and was published in the Rajasthan Gazette
on April 30, 1959.
The same day, the Rules framed
in exercise of th~ powers conferred by s. 21 of the Act
were also published, and the notification was also
issued. The Rules were subsequently amended, and
we are concerned with the Rules, as amended.
Before we deal with the case further, it is convenient to see how the Act is constructed and what the
520
SUPREME COURT REPORTS
[1962)
r96r
Rules and the notification provide. The Act, which
. . k M
consists of 21 sections, came into force in the whole of
Saini
otors,
S
f
.
Jodhpu• ;;. Others the
tate .o
RaJasthan on May 1, 1959. The Act
v.
contains the usual provisions to be found in all taxing
The State of
statutes about appeals, revision, offences and penalRajasthan
ties, power to compound offences, recovery of tax as
arrears of land revenue, bar of proceedings, excluHidayatultah J. sion of the jurisdiction of Civil Courts, refunds and
power to make rules, to which detailed reference need
not be made.
\Ve are only concerned with the imposition of the tax and the mode of its recovery, and
will refer to those provisions which are relevant. Section 3 is the charging section, and s. 4 deals with the
method of collection of the tax. Since these sections
are the main subject of attack, we quote them in full:
"3. Levy of tax.-(1) There shall be levied,
charged and paid to the State Government a tax on
all fares and freights in respect of all passengers.
carried and goods transported by motor vehicles at
such rate not exceeding one-eighth of the value of
the fare or freight, in the case of cemented, tarred,
asphalted, metalled, gravel and kankar roads and
not exceeding one-twelfth of such value in other
cases, as may be notified by the State Government
from time to time subject to a minimum of one naya
paisa in any one case, the amount of tax being
calculated to the nearest naya paisa.
Explanation.-When passengers are carried and
goods are transported by a motor vehicle, and no
fare or freight has been charged, the tax shall be
levied and paid as if such passengers were carried
or goods transported at the normal rate prevalent
on the route.
(2) Where any fare or freight charged is a lump
sum paid by a person on account of a season ticket
or as subscription or contribution for any privilege,
right or facility which is combintd with the right
of such person being carried or his goods trans ported by a motor vehicle without any further payment
or at a reduced charge, the tax shall be levied on the
amount of such lump sum or on such amount as
appears to the prescribed authority to be fair and
...
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>
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1 S.C.R. SUPREME COURT REPORTS
521
equitable having regard to the fare or freight fixed
'96'
by a competent authority under the Motor Vehicles Sainik Mcto'"
Act, 1939 (Central Act 4 of 1939).
Jodhpu' & Othm
(3) Where passengers are carried or goods transv.
ported by a motor vehicle from any place outside
The State of
the State to any place within the State, or from
Raja,than
any place within the State to any place outside the Hid
-;;;;:;10h 1
·state, the tax shall be payable in respect of the disay
·
tance covered within the State at the rate laid down
in sub-section (1) and shall be calculated on such
amount as distance covered in the State bears to
the total distance of the journey:
Provided that where passengers are carried or
goods transported by a motor vehicle from any
place within the State to any other place within the
State through the intervening territory of another
State, the tax shall be levied on the full amount. of
the fare or freight payable for the entire journey
and the owner shall issue a single ticket or receipt,
as the case may be, accordingly.
(4) Method of collection of tax.-The tax shall be
collected by the owner of the motor vehicle and
paid to .the State Government in the prescribed
manner:
Provided that in case of public carriers the State
Government may accept a lump sum in lieu of the
tax chargeable on freight in the manner prescribed:
Provided further that in case of contract carriages the State Government may accept a lump
sum in lieu of the tax chargeable on fare in the
manner prescribed."
Section 5 lays down the method of levy, and enjoins the issuance of a ticket showing the tax paid or
a receipt showing the freight charged and the tax
paid. It includes a proviso that in the case of passengers the tax becomes chargeable only on entry in
the State, if the journey began outside the State. Section 6 requires. the owner to keep accounts and to
submit periodic returns and provides for levy of penalties in case of failure, which penalties are laid down
in s. 8. Section 7 deals with the appointment of taxing authorities, and s. 12 gives the power of entry to
66
. '
522
SUPREME COURT REPORTS
[1962]
'96'
officers into vehicles, garages, and offices for inspecs . . k M 1
tion and checking. Section 10 enjoins upon the owners
Jo:~;:, &
0 ;;:;,,the duty of furnishing tables of fares and freights,
v.
time-tables, etc. Section 9 enables the State GovernThe state of ment to grant to any person or class of persons, exRajasthan
emption from all or any of the provisions of the Act.
The Rules prescribe those matters which are requirHidayatullah f. ed under the Act to be prescribed by the Rules. It is
not necessary to refer to them beyond Rules 8 and
8-A, which have been challenged. Rule 8(i) prescribes
the method of payment of tax by means of stamps to
be affixed to the tickets, and the second proviso is to
the following effect:
"Provided further that the tax payable under the
Act on fare by the owner of a motor-cycle, rickshaw
or a motor cab shall be paid to the State Government in lump sum, of which the amount shall be
fixed by the State Government from time to time by
Notification in this behalf."
Rule 8(ii) then provides:
"The owner of a public carrier shall pay to the
State Government a lump sum in lieu of the tax
chargeable under the Act on freight and the amount
of such lump sum shall be fixed by the State Government from time to time by Notification in this
behalf."
Rule 8-A, in so far as material to this case, reads:
"Provisions for payment of lump sum in lieu of tax
on fare or freight.-(1) In cases covered by the
second proviso to sub.rule (1) of rule 8 and by subrule (ii) of that rule the lump sum fixed by the State
Government as payable in lieu of the tax on fare or
freight, as the case may be, shall be deposited in
cash into a Government Treasury or a Sub-Treasury
in equal quarterly instalments payable within 15
days from the 31st day of March, the 30th day of
June, the 30th day of September and the 31st day
of December every year; and in case of such vehicles
not registered in Rajasthan to the incharge of the
check post or barrier at the time of their entry into
the State of Rajasthan or to the officer of the Excise
and Taxation Department nearest to the point of
j
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I S.C.R. SUPREME COURT REPORTS
523
entry into the State and having jurisdiction over
I96I
that area:
Sainik Motors,
Provided thatJodhpur & Others
(a) for the quarter ending on the 30th day of
v.
June, 1959, such payment shall be made for the
The State of
months of May and June, 1959, at the rate of 1/12
Rajasthan
of the said sum for each month,
(b) where the owner has not plied his vehicle for
the entire quarter immediately preceding any of the
aforesaid dates a proportionate decrease in the
amount due for that quarter may be made,
(c) if the owner ceases to ply his vehicle on a date
preceding any of the aforesaid dates, the proportionate amount for the quarter shall be paid by him
immediately upon such cessation, and
(d) where the owner has not plied his vehicle for
a continuous period of not less than three months
and produces a certificate from the authority competent under the Rajasthan Motor Vehicles Taxation Act, 1951, or the rules made thereunder to the
effect that he has been refunded the tax for that
period under section 7 of the said Act, no amount
by way of tax under the Act shall be payable for
such period.
(2) The owner shall inform the Assessing Authority as soon as his vehicle goes out of use.
When
the vehicle is again put on the road, an intimation
to that effect shall be sent to the Assessing Authority immediately."
The notification which was issued under R. 8 prescribing lump sum rates, is as follows:
"Jaipur, April 30, 1959
No. F. 15(5) E & T/59. III.-In pursuance of
rule 8 of the Rajasthan Passengers and Goods
Taxation Rules, 1959, the Government of Rajasthan
hereby directs that the tax chargeable on fare or
freight in respect of the following class of Motor
Vehicles, shall be paid in lump sum of which the
amount is mentioned opposite each such class:-
3. Public carriers (Goods Vehicles):-
(a) Holding a general permit under the Motor
Vehicles Act, 1939, to use all roads in Rajasthan:-
Hidayatullah ],
524
SUPREME OOURT REPORTS
[1962]
I96I
(i) Load carrying capacity below 5 Tons ... Rs. 420
"
per annum.
,ainik Motors
("'} L
d
·
"t 5 T
d
1 odh pu' & Oth;,,
11
oa carrymg ca pac1 y
ons an
v.
above ... Rs. 540 per annum.
The State of
(b) Holding a permit under the Motor Vehicles
Rajasthan
Act, 1939, for plying within the limits of any region
or on fixed routes in any one region;-
Hidayatullah J.
(i} Load carrying capacity below 5 Tons ... Rs.
360 per annum.
(ii) Load carrying capacity 5 Tons and
above ... Rs. 480 per annum.
"4 ... Public Carriers (Goods Vehicles) plying on
hire on temporary permits under the Motor Vehicles
Act, 1939:-
(b) Public Carriers (Goods Vehicles):-
(i) Load carrying capacity below 5 Tons ... Rs. 2
for each calendar day ..... .
(ii) Load carrying capacity 5 Tons and above ...
Rs. 4 for each calendar day ........ .
This shall have effect on and from the 1st May,
1959."
The petitioners challenged the Act, the Rules and
the notification from many angles, in the petition; but
at the hearing before us, the arguments were more
restrained. The main objection to the Act is that the
tax has not been laid upon "passengers and goods" as
authorised by Entry No. 56 but upon "fares and
freights", which are different entities, and in support
of the contention that there is a difference, reference
is made to Entry No. 89 of the Union List, where
power is conferred to tax "fares and freights". It is
submitted that a tax on fares and freights being a
different tax, cannot be levied under the Entry, and
thus, the tax is without authority of law.
The Act and the Rules are further challenged on the
grounds that they are repugnant to Arts. 301 and 304 as
being a restriction upon inter-State trade, commerce
and intercourse, to Art. 19 as involving an unreasonable
restriction upon the business of the petitioners, and
also to Art. 14 as discriminating between this mode
of transport and the Railways. The Act is further
challenged on the ground that it concedes to the State
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I S.C.R. SUPREME COURT REPORTS
525
Government the power to fix the amount of lump sum
'96'
payment withohut guidadnbce.
The hrates. and1
lumdp' su~ Saini/I Motors,
payment are c allenge
ecause t ey mvo ve
1scri- Jodhpu' & Othm
ruination between routes involving roads of different
v.
surfaces. Rules 8 and 8-A and the notification are
The State of
challenged as, it is submitted, they go beyond the Act
Ilaja,than
by making the lump sum payment compulsory, even
though under the Act it is optional, and involve payHiaayatullah f.
ment of tax even when no passengers or goods are
transported. Lastly, it is said that by making tax
payable even though the route between two intra.
State point passes outside the State, the Act has an
extra-territorial operation which is ultra vires the
legislature.
The first-and the main-contention is that the Act
in the guise of taxing passengers and goods, taxes
really the income of the petitioners, or, at any rate,
fares and freights, and is thus unconstitutional. It is
argued that the tax is borne by the operators because
of competition with the Railways. That the petitioners
are required to bear the tax themselves to stand com.
petition with the Railways is a matter of policy, which
the petitioners follow and is not something which flows
inevitably from the provisions of the Act.
We do not
agree that the Act, in its pith and substance, lays the
tax upon income and not upon passengers and goods.
Section 3, in terms, speaks of the charge of the tax "in
respect of all passengers carried and goods transport.
ed by motor vehicles", and though the measure of the
tax is furnished by the amount of fare and freight
charged, it does not cease to be a tax on passengers
and goods.
The Explanation to s. 3( I) lays down that
even if passengers are carried or goods transported
without the charge of fare or freight, the tax has to
be paid as if fare or freight has been charged. This
clearly shows that the incidence of the tax is upon
passengers and goods, though the amount of the tax
is measured by the fares and freights. A similar argument was not accepted by the Madras High Court in
Mathurai v. State of Madras('), and the same view
was expressed in Atma Ram Budhia v. State of
Bihar ('). In our opinion, the charging section does
(•) I.L.R. [1954] Mad. 867,
(2) (1952) I.L.R, 31 Pat. -!93 (S.B.),
526
SUPREME COURT REPORTS
[1962]
'96I
not go outside Entry No. 56. The tax is still on
Sainik Motors passengers and goods, though what it is to be is deterJodhpur 0;. Oth;rs mined by the amount of fare or freight. It is clear
v.
that if the tax were laid on passengers irrespective of
The state of
the distance travelled by them, it would lead to
Rajasthan
anomalies if the amount charged be the same in every
case. This is additionally clear in the case of goods
Hidayatullah J. where the weight, bulk or nature of the goods may be
different, and a scale of payments must inevitably be
devised. Though the tax is laid on passengers and
goods, the amount varies in the case of passengers
according to the distance tra veiled, and in the case of
goods because the freight must necessarily differ on
account of weight, bulk and nature of the goods transported. The tax, however, is still a tax on passengers
and goods, and the argument that it is not so, is not
sound.
We are also of opinion that no inter-State trade,
commerce or intercourse is affected. The tax is for
purposes of State, and falls upon passengers and
goods carried by motor vehicles within the State.
No doubt, it falls upon passengers and goods proceeding to or from an extra-State point but it is limited
only to the fare and freight proportionate to the
route within the State. For this purpose, there is an
elaborate scheme in R. 8-A to avoid a charge of tax on
that portion of the route which lies outside the State.
There is thus no tax on fares and freights attributable
to routes outside the State except in one instance
which is contemplated by the proviso to sub-s. (3) of
s. 3 and to which reference will be made separately.
In our opinion, the levy of tax cannot be said to
offend Arts. 301 and 304 of the Constitution.
The next contention is that the Act allows an option
to pay a lump sum in lieu of the tax, but Rules 8 and
8-A and the notification make the payment of the
lump sum compulsory.
There is no doubt that
ex facie the two provisos to s. 4 employ language
which is permissive, while the two Rules and the
notification employ language which is imperative.
The two provisos to s. 4 are enabling, and thereby
authorise the State Gove.rnment to accept a lump sum
payment in lieu of the tax actually chargeable.. The
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I S.C.R. SUPREME COURT REPORTS
527
r96r
word "accept" shows that the election to pay a lump
sum is with the taxpayer, who may choose one
Sainik Motors
method of payment or the other. The inclusion of J odhpur & Oth;rs
such a provision is designed to promote easy observv.
ance of the Act and also its easy enforcement. The
The Sta/e of
charge of tax calculated on fares and freights involves
Rajasthan
difficulties for the operators who have to keep accounts llidayatullah J.
and also diffibulties for the taxing authorities, who
have to maintain constant checks and inspections.
The lump sum payment is a convenient mode by
which an amount is payable per year irrespective of
whether the tax would be more or less if calculated
on actual fares or freights. The operators pay the
lump sum if they so choose, to avoid having to maintain accounts and to file returns, and the Government
accepts it to avoid having to inspect accounts and to
keep a check. The rates which are prescribed for a
lump sum payment per year are for those who wish to
avail of them.
It is, however, contended that though the section
creates an option, the Rules and the notification
make the payment compulsory, and attention is drawn
to the word "shall" used both in Rules 8 and 8-A and
the notification, whereas the words in the two provisos to s. 4 are "may accept". The word "shall" is
ordinarily mandatory, but it is sometimes not so
interpreted if the context or the intention otherwise
demands. In In re Lord Thurlow Ex Parte Official
Receiver('), Lord Esher, M. R., observed at p. 729 that
"the word 'shall' is not always obligatory. It may be
directory", and Lopes L. J., at p. 731 added:
"It is clear that the word 'shall' is not always
used in a mandatory sense. There is abundance of
authority to the contrary in cases where it has been
held to be directory only".
It was thus that the word 'shall' was held to be directory only, in that case, by Coutts Trotter, C. J.,
in Manikkam Pattar v. Nanchappa Chettiar ('), by
Russel, J.,'in InreRustom(3), by VenkatasubbaRao, J.,
(1) (1895) I Q.B. 724.
(2) (<928) M.W.N. 441.
(3) (1901) I.L.R. 26 Born. 396: 3 Bom. L.R 653.
528
SUPREME COURT REPORTS
tHl62]
z96z
in Jethaji Peraji Firm v. Krishnayya (') and by the
S . . k-M
Judicial Committee in Burjore and Bhavani Pershad
aini
otors,
M
Bh
(2)
jodkpur & Othus V." USSUmat
agana
.
v.
Now, Rules 8 and 8-A and the notification only lay
ne State of
down what lump sum payment has to be in each case,
Rajasthan
if a lump sum is being paid. The mandatory language is used to fix peremptorily the amount of the
Hidayatullah ].
d
lump sum. Rules 8 an 8-A and the notification cannot be said to overreach the section to which they are
subordinate and from which they must take their
colour and meaning. If the Act creates an option, it
cannot be negatived by the Rules. The Act and the
Rules must be read harmoniously, and reading them
so, it is plain that the apparent mandatory language
of the Rules and the notification still retains the permissive character of the section, but only lays down
what the amount of the lump sum must be, if lump
sum payment is made in lieu of payment of the tax
calculated on actual fares and freights. If the two
Rules and the notification are read in this way, the
mandatory language is limited to the prescribing of
the lump sum rates. In our opinion, the two Rules
and the notification are not void and contradictory of
the Act.
It is contended that the power to fix lump sums in
lieu of tax has been conferred upon Government
without guidance, and is, therefore, unconstitutional.
It is also urged that the levy of a lump sum leads to
the result that even if passengers or goods are not
transported, the tax is still payable. These arguments, in our opinion, cannot be accepted. The learned Advocate-General pointed out that the lump sum
rates work out at a very low figure, the minimum
being less than Re. 1/- per day and the maximum,
Rs. 1.50 nP. per day. The rates are no doubt very
reasonable, but this hardly meets the argument of the
petitioners. There are, however, good reasons for
upholding the fixation of lump sums. The payment of
the lump sum is not obligatory, and a person can elect
to pay tax calculated on actual fares and freights.
(1) (1929) I.L.R. 52 Mad. 648, 656,
(2) (1883) L.R. 11 I.A. 7.
-.
•
1 S.C.R. SUPREME COURT REPORTS
529
The fares and freights are fixed by competent authoz96z
rity under the Motor Vehicles Act, and that takes into
..
h
.
d h
l
.
Sa1mk Mato,,,
account t e average earnrngs, an
t e ump sum is 1 dhp
& Others
fixed as an average of what tax would be realised if
0
'"v.
calculated on actual fares and freight%,
There is no
The State of
compulsion for any operator to elect to pay a lump
Rajasthan
sum if he does not choose to do so.
Nor is the arguh
b
. d
h
I-Iidayatullah ].
ment that t ere may
e vacant peno s w en no
passengers or goods are transported but the tax is
payable, is of any force, because there may be days
when the business done might result in tax in excess of
the lump sum payable. The lump sum figure is based
on averages, and cannot be impeached by reference to
a possibility that on some days no business might be
done.
The next contention that there is discrimination
between road transport and rail transport is also without force.
The ent.ry in the State List is limited to a
tax on passengers and goods transported by road or
inland waterways. The comparison with Railways
is not admissible, because tax on railway fares and
freights is a Union subject, and is not available to the
State Legislature. There is thus a clear classification
made by the Constitution itself. No discrimination
between operators of public motor vehicles using roads
has been pointed out, and all operators are equally
affected by the Act.
Some manner of support for the
argument was sought from s. 9, where the State
Government is empowered to grant exemption from
the Act by general or specific order to any person or
class of persons. But we were informed that no
exemption has been granted except to hospitals or
charities.
It is next urged that the imposition of a higher rate
of tax for cemented, tarred, asphalted, metalled, gravel
and kankar roads than that for other roads discriminates between operators. This argument overlooks
the very object and purpose of a tax.
As is well.
known, taxes are burdens or charges imposed by
legislative power upon persons or property to raise
money for public purposes.
The power to tax is thus
67
530
SUPREME COURT REPORTS
[1962]
x96x
indispenable to any good government, and the imposis . . k ., t
tion of the tax is justified on the assumption of a
aim mo ors,
'
h
h
f
.
f
h
b
Jodhpur & Others return m t e s ape o convemences.
I
t is
e the
v.
true import of a tax, it is but natural that taxes will
The Stat. of be graded accor,ding as they involve more or less of
Rajasthan
such conveniences. They will be heavy in case of
H ·a -
roads requiring greater expenditure to construct and
' ayatuttah ]. t
. t ,
th
,
f
d
t
, .
h
o mam am,
an m case o roa s no reqmrmg sue
expenditure. All operators using the better kind of
roads have to pay the heavier tax, and there is no
discrimination between them as a class. Discrimination can only be found if it exists between persons
who are comparable, and there is no comparison
between persons using the better kind of roads and
those who use roads which are not so good. It is the
cost of construction and maintenance which makes the
difference in the tax, and no case of discrimination
can be said to be made out.
The last contention is that the proviso to sub-s. (3)
of s. 3 is extraterritorial in nature, because it makes
the tax payable on fares and freights attributable to
the territory of another State when the route passes
through such territory, even though the journey starts
and ends in Rajasthan. We were informed that now
there are no such routes, but even otherwise, such
portions must have been very short and negligible.
No affidavit was sworn to show how many such routes
were involved and what their extent was, and in view
of lack of adequate averments, we must reject the
contention.
In the result, the petition fails, and is dismissed
with costs.
Petition dismissed.