# MIS. SHARMA TRANSPORT REP. BY SHRI D.P. SHARMA v. GOVERNMENT OF A.P. AND ORS

- **Citation:** [2001] Supp. 5 S.C.R. 390
- **Court:** Supreme Court of India
- **Decided:** 2001-12-03
- **Case number:** Civil Appeal No. 4998 of 2000
- **Bench:** B.N. Kirpal, K.G. Balakrishnan, Arijit Pasayat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-sharma-transport-rep-by-shri-d-p-sharma-v-government-of-a-p-and-ors-18289
- **Pages:** 27

## Headnote

Motor Vehicles (All India Permit for Tourists and Transport Operarors) Rules, 1993/Central Motor Vehicle Rules, 1989-Rule 1(4)/Rule 84Tax-Levy o,f-On tourist but operators-By State Govern1nent-Concession
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in the tax granted pursuant to a letter by Union Government-Withdrawal of
the concession by State-Withdrawal challenged-Plea that concession
could not be withdrawn since in view (If Rule 1(4) State could not levy tax in
temis (If Rules 84-Held, concession rightly withdrawn since tax was levied
under 1963 Act and not under 1989 Rules-The power to levy or to reduce
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or to exen1pt tax or to lvithdratvn concession granted does not have its source
in Rule 84-Andhra Pradesh Motor Vehicles T<vcation Act, 1963-Sections
9(J)(a) and (b) and 3.
Constitution of India, 1950:
Article 14-Levy of tax on tourist bus operators-Concession in tax
granted-Withdrawal (If the concession by delegated legislation-Whether
withdrawa! arbitrary and discriminator;~Held, no-Since the test of arbitrary action applicable to executive action do not necessarily apply to delegated legislation-Atbninistrative /ai,v-Delegated legisl~ltion.
Article 254, Seventh Schedule list II Entry 57 and list lJJ, Entry 35Levy of tax by State on tourist buses-Legislative competence (If-Held, power
to levy taxes on vehicles whether mechanically propelled or not vests solely
on the State Legislature, though it is open to Parliament to lay down the
principles on which taxes may be levied.
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Articles 256 and 257-Concession in levy of tax granted by State
Government pursuant to a letter by Union Governnzent-Subsequent withdrawal (If the concession-Whether violative qf-Held no, since the letter (If
Union Governnzent cannot be regarded as laying down the principles of taxes
on vehicles.
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Article 301-Frecdonz (~f trade, corn111erce and intercourse-bnposition
390
SHARMA TRANSPORT v. GOVT. OF A.P.
391
of tax-Held, does not tantamount to infringement in every case-It has to be
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determined whether the impugned provision amounts to a restriction directly
and immediately on the movement of trade and commerce-Andhra Pradesh
Motor Vehicles Taxation Act, 1963-Section 9(1 )(a) and (b).
Administrative Law :
Promissory Estoppel-Held, cannot be used compelling Government or
public authority to carry out a representation or promise which is prohibited
by law or which was devoid of the authority or power of the office of the
Government or the publiraulhority-.Jt being an equitable doctrine, must
yield where equity requires-Doclrines-Doctrine of Promissory Estoppel.
Evidence Act, 1872-Section 115.
Estoppel-Applicability of-There cannot be an estoppel against any
statute.
Words and Phrases:
'Agreemen/-Meaning qf in 1he context of Ariicle 73(b) of lhe Comtirution qf India, 1950.
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'For that purpose'-Meaning qf in the context qf Article 256 of ihe
Constitution qf India, 1950.
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'Arbitrary'-Meaning of
State of Andhra Pradesh levied tax nnder Section 3 of Andhra
Pradesh Motor Vehicles Taxation Act, 1963. The State thereafter issued a
Notification dated 1.7.1995 extending concessional tax on tourist vehicles
pursuant to a letter dated 30.8.1993 from Joint Secretary to Central Gov·
ernment By another notification dated 5.6.2000 the State cancelled the
notification dated 1.7.1995.
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Appellants-tourist bus operators, filed Writ Petition before High
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Court challenging the legality of the notification dated 5.6.2000. The
same was dismissed.
In Appeal to this Court appellants contended that since the Notification dated 1.7.1995 was issued pursuant to a directive of the Central
Government, its withdrawal was unconstitutional; and that since Rule
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392
SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
1(4) of Motor Vehicles (All India Permit for Tourist and Transport
Operators), Rules, 1993 was intended to curtail the power of State to levy
taxes in respect of vehicles, hence the tax permitted in terms of Rule 84 of
Central Motor Vehicles Rules, 1989 could not he levied; and that in view
of Articles 73

## Text

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A
MIS. SHARMA TRANSPORT REP. BY SHRI D.P. SHARMA
v.
GOVERNMENT OF A.P. AND ORS.
DECEMBER 3, 2001
B
(B.N. KIRPAL, K.G. BALAKRISHNAN AND ARIJIT PASAYAT, JJ.]
Motor Vehicles (All India Permit for Tourists and Transport Operarors) Rules, 1993/Central Motor Vehicle Rules, 1989-Rule 1(4)/Rule 84Tax-Levy o,f-On tourist but operators-By State Govern1nent-Concession
C
in the tax granted pursuant to a letter by Union Government-Withdrawal of
the concession by State-Withdrawal challenged-Plea that concession
could not be withdrawn since in view (If Rule 1(4) State could not levy tax in
temis (If Rules 84-Held, concession rightly withdrawn since tax was levied
under 1963 Act and not under 1989 Rules-The power to levy or to reduce
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or to exen1pt tax or to lvithdratvn concession granted does not have its source
in Rule 84-Andhra Pradesh Motor Vehicles T<vcation Act, 1963-Sections
9(J)(a) and (b) and 3.
Constitution of India, 1950:
Article 14-Levy of tax on tourist bus operators-Concession in tax
granted-Withdrawal (If the concession by delegated legislation-Whether
withdrawa! arbitrary and discriminator;~Held, no-Since the test of arbitrary action applicable to executive action do not necessarily apply to delegated legislation-Atbninistrative /ai,v-Delegated legisl~ltion.
Article 254, Seventh Schedule list II Entry 57 and list lJJ, Entry 35Levy of tax by State on tourist buses-Legislative competence (If-Held, power
to levy taxes on vehicles whether mechanically propelled or not vests solely
on the State Legislature, though it is open to Parliament to lay down the
principles on which taxes may be levied.
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Articles 256 and 257-Concession in levy of tax granted by State
Government pursuant to a letter by Union Governnzent-Subsequent withdrawal (If the concession-Whether violative qf-Held no, since the letter (If
Union Governnzent cannot be regarded as laying down the principles of taxes
on vehicles.
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Article 301-Frecdonz (~f trade, corn111erce and intercourse-bnposition
390
SHARMA TRANSPORT v. GOVT. OF A.P.
391
of tax-Held, does not tantamount to infringement in every case-It has to be
A
determined whether the impugned provision amounts to a restriction directly
and immediately on the movement of trade and commerce-Andhra Pradesh
Motor Vehicles Taxation Act, 1963-Section 9(1 )(a) and (b).
Administrative Law :
Promissory Estoppel-Held, cannot be used compelling Government or
public authority to carry out a representation or promise which is prohibited
by law or which was devoid of the authority or power of the office of the
Government or the publiraulhority-.Jt being an equitable doctrine, must
yield where equity requires-Doclrines-Doctrine of Promissory Estoppel.
Evidence Act, 1872-Section 115.
Estoppel-Applicability of-There cannot be an estoppel against any
statute.
Words and Phrases:
'Agreemen/-Meaning qf in 1he context of Ariicle 73(b) of lhe Comtirution qf India, 1950.
B
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'For that purpose'-Meaning qf in the context qf Article 256 of ihe
Constitution qf India, 1950.
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'Arbitrary'-Meaning of
State of Andhra Pradesh levied tax nnder Section 3 of Andhra
Pradesh Motor Vehicles Taxation Act, 1963. The State thereafter issued a
Notification dated 1.7.1995 extending concessional tax on tourist vehicles
pursuant to a letter dated 30.8.1993 from Joint Secretary to Central Gov·
ernment By another notification dated 5.6.2000 the State cancelled the
notification dated 1.7.1995.
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Appellants-tourist bus operators, filed Writ Petition before High
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Court challenging the legality of the notification dated 5.6.2000. The
same was dismissed.
In Appeal to this Court appellants contended that since the Notification dated 1.7.1995 was issued pursuant to a directive of the Central
Government, its withdrawal was unconstitutional; and that since Rule
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392
SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
1(4) of Motor Vehicles (All India Permit for Tourist and Transport
Operators), Rules, 1993 was intended to curtail the power of State to levy
taxes in respect of vehicles, hence the tax permitted in terms of Rule 84 of
Central Motor Vehicles Rules, 1989 could not he levied; and that in view
of Articles 73, 256 and 257 of the Constitution of India, directives of the
Central Government were binding and withdrawal of the notification
dated 1.7.1995 was illegal; and that impugned notificationwas beyond the
legislative power which the State derives under Entry 57 of List II of
Seventh Schedule to the Constitution in view of express language used in
Entry 35 of List III and also by virtue of mandate maintained in Article
254; and that withdrawal of the consessional tax was an instance of arhiC
trary exercise of power which was not hacked by any relevant consideration; and that impugned notification could not have been resolved since
Article 256 obligates the State to exercise its executive power to ensure
compliance with the laws made by Parliament; and that action was violative
of guarantees and perceptions provided by Article 301 of the Constitution.
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Union of India contended that letter dated 30.8.1993 could not he
construed to he a directive by the Central Government to the States; and
that in the present case Articles 73, 256 and 257 had no application. State
of Andhra Pradesh contended that in the present case Article 301 of the
Constitution was not applicable; and that the same could not he adjudiE
cated as there was no challenge before High Court on this question; and
that it was not required to issue fresh notification to make the levy, since
it was not a case of repeal and was cancellation of a notification in terms of
Section 9(1)(b) of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.
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Dismissing the appeals, the Court
HELD : 1.1. Letter dated 30 August, 1993 from the Central Government cannot he regarded as a law laying down the principles of taxes
on vehicles. It cannot be treated as a subordinate legislation deriving its
power or force from the Act or any other law made by the Union. Though
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reference has been made to the consent of the various State Governments,
it cannot be treated to be a directive. It was only a request to the States to
act in terms of the deliberations which took place at the meeting of the
Transport Development Council. [400-E-F]
1.2. There is no law specifying the principles of taxation on the
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subject matter of controversy so as to bring in application of either
SHARMA TRANSPORT v. GOVT. OF A.P.
393
Article 256 or Article 257 of the Constitution. Article 256 has application
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only when any law has been made by Parliament and the executive power
of the State is made subservient to it by requiring it to ensure compliance
with such laws. Where it appears to the Government of India that it is so
necessary to do, directions can be issued. Article 257 provides that the
executive power of every state shall be so exercised as not to impede or
prejudice the exercise of the executive power of the Union. Where
the Government of India feels it so necessary to do so, it can issue a
direction. [401-F-G]
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1.3. Clause (b) in Article 73 cannot apply to legislative powers of the
State. The expression 'agreement' referred to in the said clause has to be
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considered in terms of Article 299 of the Constitution. Article 246 deals
with subject matter of laws made by Parliament and Legislatures of
States. Clause (1) of the said Article gives exclusive power to deal with the
matters enumerated in List 11 of the Seventh Schedule. The expression 'for
that purpose' in Article 256 refers to the requirement of compliance with
the laws made by Parliament. Article 256 operates if the Government of
India feels that the executive power of the States is being exercised in a
manner which may amount to impediment with the executive power of the
Union. Entry 56 of List II of the Seventh Schedule deals with passengers
and the Union has no power to levy taxes in respect of passengers. Hence
the let!',< of the Joint Secretary to the Government of India dated 30th
August, 1993 was not in the nature of a direction. [401-H; 402-A-B-C]
1.4. Rule 1(4) of Motor Vehicles (All India Permit for Tourist and
Transport Operators) Rules, 1993 is not intended to have th• effect of
curtailing power of States to levy taxes under relevant enactments. Power
to levy taxes on vehicles whether mechanically propelled or not vests
solely on the State Legislature, though it may be open to the Parliament
to lay down the principles on which the taxes may be levied on mechanically propelled vehicles in the background of Entry 35 of List III. The
Government of India communication dated 30th August, 1993 does not in
any sense violate the power of the State Legislature or its delegatee to levy
or exempt taxes from time to time. [402-D-G]
1.5. As per Rule 84 of Central Motor Vehicle Rules, 1989 the liability
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to pay taxes under the law does not cease merely on account of obtaining a
tourist permit. The said Rule is not a substantive charging provision as far
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SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
as levy is concerned. The power to levy tax, to reduce or exempt the tax
pnd to withdraw concession granted did not have its source in Rule 84, but
are clearly founded on the taxing statutes i.e. Andhra Pradesh Motor
Vehicles Taxation Act, 1963. It is nobody's case that State is authorJsed to
levy or collect taxes only by operation of Rule 84. [402-H; 403-A-B]
2.1. The plea relating to promissory estoppel has no substance. Promisso:y estoppel cannot be used compelling the Government or a public
authority to carry out a representation or promise which is prohibited by
law or which was deviod of the authority or power of the officer of the
Government or the public authority to make. Doctrine of promissory
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estoppel being an equitable doctrine, it must yield place to equity, if larger
public interest so requires, and if it can be shown by the Government or
public authority for having regard to the facts as they have transpired that
it would be inequitable to hold the Government or public authority to the
promise or representation made by it. The Court on satisfaction would not,
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in those circumstances raise the equity in favour of the persons to whom a
promise or representation is made and enforce the promise or representation against Government or public authority. [407-F-H; 408-B]
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Vasantkumar Radhakrishnan Vora v. The Board q{Trustees qfthe Port qf
Bomba)~ AIR (1991) SC 14; Sales-tax Officer and A111: v. Mis. Shree Durga
Oil Mills and Anr., [1997] 7 SCALE 726 and Dr. Aslwk Kumar Maheshwari v.
State qf U.P. and A111:, [1998] 2 SCC 502, referred to.
2.2. Before the Rule of 'Promissory Estoppel' can be invoked, it has
to be shown that there was a declaration or promise made which induced
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the party to whom the promise was made to alter its position to its disadvantage. [404-D-E]
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Black's Law Dictionary, referred to.
2.3. Even though a concession is extended for a fixed period, the
same can be withdrwan in public interest. There cannot be estoppel againt
any statute. Where it is in public interest, the Court will not interfere
because public interest must override any consideration of private loss or
gain. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel, clear, sound and positive foundation must be
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laid in the petition itself by the party invoking the doctrine and that bald
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SHARMA TRANSPORT v. GOVT. OF A.P.
395
expressions, without any supporting material, to the effect that the docA
trine is attracted because the party invoking the doctrine has altered its
position relying on the assurance of the Government would not be sufficient to press in to aid the doctrine. [403-B-C; E-F]
Sales Tax Officer and Anr. v. Mis. Shree Durga Oil Mills and Anr., [1997]
7 SCALE 726; Kasinka Trading and Anr. '" Union of India and Anr., [1995] 1
SCC 274 and Shrijee Sales Corporation & Anr. v. Union of India, [1997] 3
sec 398, referred to.
Robertson v. Minister of Pensions, [1949] (1) K.B. 227; Grundt and Ors.
v. The Great Boulder Proprietary Gold Mines Ltd., (1938) (59) CLR 641;
Central London Property Trust Ltd. v. High Trees House Ltd., [1947] KB 130
and Central Newbury Car Auctions Ltd. v. Unity Finance Ltd. and Anr., [1956]
3 All ER 905, referred to.
"Judicial Review of Administative Action" (4th Edition at page 103)
and "Recent Developments in the Doctrine of Consideration", Modern Law
Review, Vol. 15, referred to.
2.4. Government cannot claim any immunity from the doctrine of
· promissory estoppel and it cannot say that it is under no obligation to act in
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a manner i.e. fair and just or that it is not bound by the considerations of
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honesty and good faith. Since the doctrine of promissory estoppel is an equitable doctrine, it mnst yield where the equity so requires. Ifit can be shown
by the Government that having regard to the facts as they have transpired,
it would be inequitable to hold the Government or public authority to the
promise or representation made by it, the Court would not raise an equity
in favour of the promise and enforce the promise again! the Government.
The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government should be
held bound by the promise made by it. But the Government must be able· to
show that in view of the fact as have been transpired, public interest would
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not be prejudiced Where the Government is required to carry out the promG
ise the Court would have to balance, the public interest in the Government's
carrying out the promise made to the citizens, which helps citizens to act
upon and alter his position and the public interest likely to suffer if the
promises were required to be carried out by the Government and determine
which way the equity lies. [407-A-D]
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SUPREME COURT REPORTS
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Union of India and Ors. v. Mis. Anglo Afgan Agencies etc., AIR (1968)
SC 718; Century Spinning and Manufacturing Co. Ltd. and Anr. v. The
Ulhasnagar Municipal Council and Anr., (1970] 3 SCR 854 and Mis. Motilal
Padampat Sugar Mills Co. ( P) Ltd. v. State of Uttar Pradesh and Ors., [1979]
2 SCR 641, referred to.
3. Since the operators in the State of Andhra Pradesh are required to
pay the same tax as those registered in other States, there cannot be any
question of irrationality in withdrawal of the notification. The tests of
arbitrary action applicable to executive action do not necessarily apply to
delegated legislation. In order to strike down a delegated legislation as
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arbitrary it has to be established that there is manifest arbitrariness. In
order to be described as arbitrary, it must be shown that it was not
reasonable and manifestly arbitrary. The expression "arbitrary" means:
in an unreasonable manner, as fixed or done capriciously or at pleasure,
without adequate determining principle, not founded in the nature of
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things, non-rational, not done or acting according to reason or judgment,
depending on the will alone. In the present cases all persons who are
similarly situated are similarly affected by the change. That being so, there
is no question of auy discrimination. [408-B-D]
4.1. Imposition of a tax does not in every case tantamount to infringement of Article 301. One has to determine whether the impugned
provision amounts to a restriction directly and immediately on the movement of trade or commence. [408-E·F]
The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan
and Ors., [1963] 1 SCR 491, referred to.
4.2. For the tax to become a prohibited tax it has to be a direct tax
the effect of which is to hinder the movement of part of trade. So long as a
tax remains compensatory it cannot operate as a hindrance. Whether a tax
is compensatory or not cannot be made to depend on the preamble of the
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statute imposing it. A tax cannot also be said not to be compensatory
because the precise or specific amount collected is not actually nsed for
providing any facilities. [414-H; 415-D-E]
Mis. Sainik Motors, Jodhpur and Ors. v. State of Rajasthan, AIR (1961)
SC 1480 and B.A. Jayaram and Ors. v. Union of India and Ors., [1984] 1 SCC
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168, referred to.
SHARMA TRANSPORT v. GOVT. OF A.P. [ARIJIT PASAYAT, J.]
397
4.3. Since there was no averment in the petitions before the High
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Court with regard to violation of Article 301 of the Constitution and since
no view was expressed by the High Court on this issue, in the absence of
any argument or plea before it, the question whether public interest was
involved or not required a factual adjudication. Since there were no
pleadings, the State did not have an opportunity to indicate its stand.
Under the circumstances, it is not appropriate to consider that question
for the first time in these appeals, particularly, when factual adjudication
would be necessary. [415-G-H; 416-A]
5. There was no requirement to issue a fresh Notification to make
the levy. Notification dated l.7.1995, did not supersede the original Notification issued under Section 3 of the Taxation Act. The Notification
dated 1.7.1995 was issued in exercise of powers conferred under Section
9(1) (a) of the Taxation Act, while the impugned Notification was issued
in exercise of powers conferred under Section 9(l)(b) of the said Act. It is
to be noted that originally Notification was issued under Section 3 of the
said Act and its operation has not been questioned. [416-A-B; Cl
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4998 of 2000.
From the Judgment and Order dated 3.8.2000 of the Andhra Pradesh
High Court in W.P. No. 1049 of 2000.
WITH
C.A. Nos. 4999-5008, 5009, 5010, 5011, 5012 of 2000.
Harish N. Salve, Solicitor General, K.N. Bhat, G.L. Sanghi, Ms. K.
Amareswari, B.K. Choudhary, E.C. Vidyasagar, A.T.M. Sampath, Irshad
Ahmed, R.S. Hegde, Somiran Sharma, Prashant Jain, P.P. Singh, S. Udaya
Kumar Sagar, S.R. Setia, Jaideep Gupta, Ms. Niranjana Singh, Ms. Anil
Katiyar, T.V. Ratnarn, K. Subba Rao, Guntur Prabhakar (NP), K. Ram Kumar
for the appearing parties.
The Judgment of the Court was delivered by
ARUIT PASAYAT, J. These appeals relate lo a common judgment of
the Andhra Pradesh High Court by which challenge to Notification issued by
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the State Government in G.O. Ms. No.83, Transport, Roads and Buildings
(Tr.II) Department dated 5 .6.2000 was rejected. By the said Notification issued
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under clause (b) of Section 9(1) of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (in short 'the Taxation Act') an earlier order dated 1.7.1995
issued by the Transport, Roads and Buildings (Tr. II) Department, was cancelled. The appellants who are operators of tourist buses originating from
Karnataka State (their home State) and plying in adjacent States including the
State of Andhra Pradesh filed the writ petitions assailing the legality and
constitutional validity of the said Notification dated 5.6.2000.
Case of the appellants as canvassed before the High Court and reiterated
in this Court is essentially as follows:
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Vehicles of the appellants arc covered by the tourist vehicles permits
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issued by the State Transport Authority, Karnataka under Rule 64(1) of the
Karnataka Motor Vehicles Rules and the authorization certificates issued by
the same authority under the Motor Vehicles (All India Permit for Tourist and
Transport Operators) Rules, 1993 (in short 'permit rules) and also the recognition certificates issued by the Director of Tourism, Bangalore under the said
Rules. By virtue of these permits and certificates, tourist vehicles of the
appellants are authorized to ply in certain contiguous States including the
State of Andhra Pradesh. Central Government after discussions with the State
Governments and with their consent formulated policies in the matter of
concessions to be extended to tourist vehicles. A Notification dated 1.7 .1995
was issued pursuant to a directive of the Central Government and its withdrawal is clearly unconstitutional. Rule I ( 4) of the Permit Rules makes it clear
that the conditions prescribed in Rules 82 to 85A of the Central Motor
Vehicles Rules, 1989 (in short 'the Cent,al Rules') do not apply to permits
granted under the scheme governed by the Permit Rules. Therefore, in the
garb of levying taxes on fares and freights, the directives of the Central
Government are being violated and the same is impermissible. With reference
to Articles 73, 256 and 257 of the Constitution of India 1950 (for short 'the
Constitution'), it is submitted that the directives of the Central Government
are binding and the withdrawal Notification i.e. G.0.Ms.No.83 dated 5th
June, 2000 is clearly illegal. With reference to Entry 35 of List III of the
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Seventh Schedule, it was submitted that the earlier Notification was in accord
with the said entry. Section 88(9) of the Motor Vehicles Act, 1988 (in short
'the Act') throws considerable light on the controversy and similar is the
position in respect of Section 88(14) of the Act. State Legislature has no
competence to rescind or reverse the Notification conferring the benefits of
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concessional rate of lax to tourist operators. State law cannot go counter to the
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SHARMA TRANSPORT v. GOVT.' OF A.P. [ARIJIT PASAYAT, J]
399
directives of Central Government on this subject. Therefore, the impugned
Notification is beyond the legislative power which the State derives under
Entry 57 of List II of the Seventh Schedule to the Constitution, in view of
the express language used in Entr)' 35 of List III and also by virtue of the
mandate contained in Article 254 of the Constitution. A plea of promissory
estoppel was also pressed into service. It was submitted that the withdrawal
of the concessional tax is an instance of arbitrary exercise of power which is
not backed by any relevant consideration. Article 256 of the Constitution
obligates the State to exercise its executive power to ensure compliance with
the laws made by Parliament. Therefore, the impugned Notification could not
have been withdrawn. In any event, after the withdrawal of the Notific;ation
there was a repeal of the relevant provision and without an operative Notification, taxes cannot be charged. Lastly, it was submitted that the action is
clearly violative of guarantees and protections provided by Article 301 of the
Constitution. It is to be noted that except the last stand indicated above, all
other stands were examined by the High Court and negatived.
It was submitted by learned counsel appearing for the appellants that
reliance placed by the High Court on the decision of this Court in B.A.
Jayaram and Ors. V. Union of India and Ors., (1984] I sec 168) is inappropriate as factual and legal background involved are different. Jn any event,
some of the observations made in the said case need re-consideration in view
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of what has been stated by a 7-Judge Bench in The Automobile Transport
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(Ra;astlum) ltd. v. The State of R(liasthan and Ors., [1963] 1 SCR 491.
Learned Solicitor General appearing for the Union of India stated that
the letter dated 30th August, 1993 issued by the Joint Secretary to the
Government of India to which reference was made in the Notification dated
1.7.1995 cannot be construed to be a directive by the Central Government to
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the States. Apparently, Articles 73, 256 and 257 deal with different situations
in which directives can be issued. But the present case is one to which none
of these Articles apply. He, however, submitted that there are certain observations in Jayaram 's case (supra) which are prima .facie at variance with the
views expressed by th•: larger Bench in the Automobile Transport's case
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(supra).
Learned counsel appearing for the ·state of Andhra Pradesh submitted
that there was no challenge before the High Court on the question of Article
301 of the Constitution, except a vague and general plea taken in the writ
petitions. In any event, this was a case to which Article 301 of the Constitution
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had no application. In fact, President's assent had been taken and, therefore,
without any plea being taken as to how the levy is not reasonable or is not
in public interest. For the first time in these appeals, such a plea cannot be
pressed into service. It was also submitted that this was not a case of repeal
and was cancellation of a Notification in terms of Section 9 ( 1 )(b) of the
Taxation Act.
The respective stands need careful consideration. The primary question
which appears to have been urged before the High Court was whether the
letter of Joint Secretary to the Government of Indi1a dated 30th Augus~ 1993
is in the nature of directive. Articles 73, 256 and 257 are the relevant
provisions. Article 73 relates to the extent of executive power of the Union,
while Articles 256 and 257 deal with obligation of States and the Union and
the control of the Union over the States in certain cases respectively. Entry
57 of List II of 7th Schedule deals with taxes on motor vehicles. This is,
however, subject to the provisions of Entry 35 of List III. The said Entry of
the Concurrent List reads as under:
"Mechanically propelled vehicles including the principles on which
taxes on such vehicles are to be levied".
By no stretch of imagination the letter dated 30th August, 1993 can be
regarded as a law laying down the principles of laxes on vehicles. ll cannot
also be treated as a subordinate legislation deriving its power or force from
the Act or any other law made by the Union. It has been fairly stated by
learned Solicitor General that though reference has been made to the consent
of the various State Governments, it cannot be tre:ated to be a directive. It was
·Only a request to the Stales to act in terms of the deliberations which took
place at the meeting of the Transport Development Council. The letter so far
as relevant reads as follows:
"No.RT-11053/1/92-MVL (Vol.II)30th August, 1993
To:
All the Transport Secretaries of
The State Govts./Union Territory
Administrations.
Sub: Scheme for national permits for tourist coaches.
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2. ······················
3. I am writing to request you to take necessary action to incorporate these provisions relating to composite fee in the State Motor
Vehicles Taxation Rules and also issue necessary instructions/guidelines to the State Transport Authorities for grant of permits. It may also
be clarified that the composite fee is in lieu of all taxes.
Yours faithfully,
(C.S.Khairwal)
Joint Secretary to the
Govt. of India"
This is not a case where the theory of occupied field can be made
applicable. The Taxation Act essentially deals with fares charged from passengers and freight collected from them. On the contrary, the Act deals with
levy on vehicles. They are conceptually different. Whatever has been stated
above in the background of Article 73 is equa!iy applicable to Articles 256
and 257 of the Constitution. Article 256 provides that the executive power of
every State shall be so exercised as to ensure compliance with the laws made
by Parliament and any existing laws which apply in that State and the executive
power of the Union shall extend lo the giving of such directions to a State as
may appear to the Government of India lo be necessary for that purpose. This
Article has application only when any law has been made by Parliament and
the executive power of the Stale is made subservient to ii by requiring it to
ensure compliance with such laws.Where it appears to the Government of India
that it is so necessary lo do, directions can be issued. Article 257 provides that
the executive power of every State shall be so exercised as not to impede or
prejudice the exercise of the executive power of the Union. Where the Government of India feels it so necessary to do so, it can issue a directiOW.-At the
cost of repetition it may be noted that there is no law specifying the principles
of taxation on the subject matter of controversy so as to bring in application
of either Article 256 or Article 257 of the Constitution.
It has to be noted that clause (b) in Article 73 cannot apply to legislative
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powers of the State. The expression 'agreement' referred to in the said clause
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has to be considered in terms of Article 299 of the Constitution. Article 246
deals with subject matter of laws made by Parliament and Legislatures of
States. Clause (I) of the said Article gives exclusive power to deal with the
matters enumerated in List II of the Seventh Schedule. The expression 'for
that purpose' in Article 256 refers to the requirement of compliance with the
laws made by Parliament. Article 256 operates if th" Government of India
feels that the executive power of the States is being exercised in a manner
which may amount to impediment with the executive power of the Union. It
has to be noted that Entry 56 of List II of the Seventh Schedule deals with
passengers and the Union has no power to levy taxes in respect of passengers.
Above being the position, there is no substance in the plea of the appellants
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that the letter of the Joint Secretary to the Government of India dated 30th
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August, 1993 was in the nature of a direction.
It is also submitted that Rule 1(4) of the Permit Rules is intended to
curtail the power of State to levy taxes in respect of vehicles. This plea also
is without any substance. The said rule is not intended to have the effect of
curtailing power of States to levy taxes under relevant enactments. The said
Rule reads as follows:
"1(4): The conditions prescribed in Rules 82 to 85-A of the Central
Motor Vehicles Rules, 1989 shall not apply to the permits granted
under this scheme".
Power to levy taxes on vehicles, whether mechanically propelled or not
vests solely on the ·State Legislature, though it may be open to the Parliament
to lay down the principles on which the taxes may be levied on mechanically
propelled vehicles in the background of Entry 35 of List III. To put it
differently, Parliament may lay down the guidelines for the levy of taxes on
such vehicles, but the right to levy such taxes vests solely in the State
Legislature. No principles admittedly have been fomiulate<l by the Parliament.
In that sense, the Government of India's communication dated 30th August,
1993 does not in any sense violate the power of the State Legislature or its
delegatee to levy or exempt taxes from time to time.
It is the stand of the appellants that what is ruled out by application of
Rule 1 ( 4) of the Permit Rules has been indirectly brought into force. Reference
has been made to Rule 84 of the Central Rules to submit that the levy which
is pennitted in terms of that rule is clearly excluded of its application. This plea
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is equally without any substance as Rule 84 states that the liability to pay taxes
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SHARMA TRANSPORT v. GOVT. OF A.P. [ARUIT PASAYAT, J.]
403
under the law does not cease merely on account of obtaining a tourist permit.
Said rule is not a substantive charging provision as far as levy is concerned.
The power to levy tax, to reduce or exempt the tax and to withdraw concession
granted did not have its source in Rule 84, but are clearly founded on the taxing
statutes i.e. Taxation Act. It is nobody's case that State is authorized to levy
or collect taxes only by operation of Rule 84.
Next plea is the oft repeated one of promissory estoppel. It has to be
noted that even though a concession is extended for a fixed period, the same
can be withdrawn in public interest. In Sales Tax Officer and Anr. v.
Mis Shree Durga Oil Mills and Anr., (1997) 7 SCALE 726), it has been held
by this Court that a Notification granting exemption of tax can be withdrawn
by any point of time. There cannot be estoppel against any statute. Where it
is in public interest, the Court will not interfere because public interest must
0·1erride any consideration of private loss or gain [see Kasinka Trading and
Anr. v. Union of India and Anr., [1995] I SCC 274. In Shrijee Sales Corporation and Anr., v. Union of India, [1997] 3 SCC 398, it was observed that
where there was supervening public interest, the Government is free to change
its stand and withdraw the exemption already granted. One such reason for
changing its policy decision can be resource crunch and the loss of public
revenue.There is preponderance of judicial opinion that to invoke the doctrine
of promissory estoppel, clear, sound and positive foundation must be laid in
the petition itself by the party invoking the doctrine and that bald expressions,
without any supporting material, to the effect that the doctrine is attracted
because the party invoking the doctrine has altered its position relying on the
assurance of the Government would not be sufficient to press into aid the
doctrine. The principle of promissory estoppel is that where one party has by
his word or conduct made to the other a clear and unequivocal promise or
representation which is intended to create legal relations or affect a legal
relationship to arise in the future, knowing or intending that it would be acted
upon by the other party to whom the promise m representation is made and it
is in fact so acted upon by the other party, the promise or representation would
be binding on the party making it and he would not be entitled to go back upon
it, if it would be inequitable to allow him to do so, having regard to the dealings
which have been taken place between the parties. The doctrine of promissory
estoppel is now well established one in the field of administrative law. The
foundation for the claim based on the principle of promissory estoppel in public
law was laid by Lord Denning in 1948 in Robertson v. Minister of Pensions,
[1949] 1 K.B. 227. Prof De Smith in his "Judicial Review of Administrative
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Action" (4th Edition at page 103) observed that "the citizen is entitled to rely
on their having the authority that they have asserted".
Doctrine of 'Promissory Estoppel' has been evolved by the courts, on the
principles of equity, to avoid injustice.
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'Estoppel' in Black's Law Dictionary, is indicated to mean that a party
is prevented by his own acts from claiming a right to the detriment of other
party who was entitled to rely on such conduct and has acted accordingly.
Section 115 of the Indian Evidence Act is also, more or less, couched in a
language which conveys the same expression.
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'Promissory Estoppel' is defined as in Black's Law Dictionary as 'an
estoppel which arises when there is a promise which promisor should reasonably expect to induce action or forbearance of a definite and substantial
character on the part of promise, and which does induce such action or
forbearance, and such promise is binding if injustice can be avoided only by
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enforcement of promise'.
These definitions in Black's Law Dictionary which are based on decided cases, indicate that before the Rule of 'Promissory Estoppel' can be
invoked, it has to be shown that there was a declaration or promise made
which induced the party to whom the promise was made to alter its position
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to its disadvantage.
In this backdrop, let us travel a little distance into the past to understand
the evolution of the Doctrine of 'ProII'jssory Estoppel'.
Dixon, J. as Australian jurist, in Grundt and Ors. v. The Great Boulder
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Proprietmy Gold Mines Ltd., (1938) 59 CLR 641, laid down as under:
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"It is often said simply that the party asserting the estoppel must have
been induced to act to his detriment. Although substantially such a
statement is correct and leads to no misunderstanding, it does not
bring out clearly the basal purpose of the doctrine. That purpose is to
avoid or prevent a detriment to the party asserting the estoppel by
compelling the opposite party to adhere to the assumption upon which
the former acted or abstained from acting. This means that the real
detriment or harm from which the law seeks to give protection is that
which would flow from the change of position if the assumption were
deserted that Jed to it."
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SHARMA TRANSPORT v. GOVT. OF A.P. [ARIJIT PASAYAT, J.]
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The principle, set out above, was reiterated by Lord Denning in Central
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London Property Trust Ltd. v. High Trees House Ltd., [1947) KB 130, when
he stated as under:
"A promise intended to be binding, intended to be acted upon, and in
fact acted upon is binding"
Lord Denning approved the decision of Dixon, J. (supra) in Central
Newbury Car Auctions Ltd. v. Unity Finance Ltd. and Anr., ( 1956) 3 All ER
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905). Apart from propounding the above principle on judicial side, Lord
Denning wrote out an article, a classic in legal literature, on "Recent Developments in the Doctrine of Consideration", Modern Law Review, Vol.15, in
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which he expressed as under :
"A man should keep his word. All the more so when the promise is
not a bare promise but is made with the intention that the other party
should act upon it. Just a contract is different from tort and from
estoppel, so also in the sphere now under discussion promises may
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give rise to a different equity from other conduct.
The difference may, lie in the necessity of showing 'detriment'. Where
one party deliberately promises to waive, modify or discharge his strict
legal rights, intending the other party to act on the faith of promise, and
the other party actually does act on it, then it is contrary, not only to
equity but also to good faith, to allow the promisor to go back on his
promise. It should not be necessary for the other party to show that he
a<ted to his detriment in reliance on the promise. It should be sufficient
that he acted on it."
This principle has been evolved by equity to avoid injustice. It is neither in the
realm of contract nor in the realm of estoppel. Its object is to interpose equity
shorn of its form to mitigate the rigour of strict law.Jn Union of India and Ors.
v. Mis Anglo Afgan Agencies etc., AIR (1968) SC 718, it was inter alia
observed as follows:
"We are unable to accede to the contention that the executive necessity
releases the Government from honouring its solemn promises relying
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on which citizens have acted to their detriment. Under our constitutional set up no person may be deprived of his authority of law, if a
member of the Executive seeks to deprive a citizen of his right or
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liberty otherwise than in exercise of power derived from the law
common or statute the Courts will be competent to and indeed would
be bound to protect the rights of the aggrieved citizens."
It was further held in its summing up thus :
"Under our jurisprudence the Government is not exempt from liability
to carry out the representation made by it as to its future conduct and
it cannot on some undefined and undisclosed ground of necessity or
expediency fail to carry out the promise solemnly made by it, not claim
to be the Judge of its own obligation to the citizen on an ex parte
appraisement of the circumstances in whici1 the obligation has arisen."
In Centwy Spinning and Mant~facturing Co. Ltd. and Anr. v. 11ze Ulhasnagar
Municipal Council and Anr., [1970] 3 SCR 854, this doctrine of promissory
estoppel against public authorities was extended thus:
"This Court refused to make distinction between the private individual and a public body to far as the doctrine of promissory estc·ppel
is concerned."
Jn Mis Motilal Padampat Sugar Mills Co. ( P) Ltd. v. State ~f Uuar Pradesh
and Ors., [1979] 2 SCR 641, the doctrine of promissory estoppel was ap?lied
to the executive action of the State Government and also denied to the State
of the doctrine of executive necessity as a valid defence.