# NAZEERIA MOTOR SERVICE ETC. ETC v. STATE OF ANDHRA PRADESH & ANR

- **Citation:** [1970] 2 S.C.R. 52
- **Court:** Supreme Court of India
- **Decided:** 1969-08-21
- **Case number:** Civil Appeals Nos. 69, 112 and 113 of 1968
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nazeeria-motor-service-etc-etc-v-state-of-andhra-pradesh-anr-4858
- **Pages:** 7

## Headnote

52
NAZEERIA MOTOR SERVICE ETC. ETC.
A
v.
STATE OF ANDHRA PRADESH & ANR.
August 21, 1969
(J. C. SHAH,ACTING C.J., V. RAMASWAMI AND A. N. GROVER,
B
JJ.J
Constitution of India, Arts, 301, 304(b) and 19(l)(g) and Andhra
Pradesh Motor Vehicles (Taxation of Passengers and Goods) An1endn1ent
a11d Validatio11 Act XXXIV of 196!-Constit1o!io11a/ity of fares
and
freights imposed by the Act.
The appellants, motor transport operators, challenged the increase in
C
surcharge of the fares and f:><ights imposed by the Andhra Pradesh Motor
Vehicles (Taxation of Pas5"ngers and Goods) Amendment and Validation
Act, 1961. They uraed : (i) the Act was neither rel!Ulalory nor compensa·
tory in nature and it fell directly within the mischief of Art. 301 of the
Constitution; (ii) the imposts exceeded the limils of permissible reasonableness, were not in the public interest and. therefore. violated Arts. 304(b)
and 19(1)(g); and (iii) the Act violated Art. 14 (a) inasmuch as it had
not been made applicable to the Telegana area although it was appli. able
D
to the Andhra area and (b) the vehicles on inter-State routes on permits
granted by other States h;:d not bc·on subjected to tax.
HELD : · (i) It was not the contentio;1 of the State that the i'lpugned
Act imposed a tax by way of a regulatory or compensatory measure. There·
fore, it had to be ~cen \Vhether the restrictions imposed were reasonr.ble,..
and in the public interest within the n1eaning of Art. 304(b); these questions were open to examination by the court notwithstanding the fact that
E
the sanction of the Pre~ident was obtained :n-compliance with the ArfcJe.
[55 E-FJ
Mathurai Pii/ay v. S:ate of Madras. (1954) I M.L.J. 110, Automobile
Tran.roort (Raia<tlwn) Ltd. v. Stat.e of Rajasthan & Ors. [1963] I S.C.R.
49-1, Khyerbari Tea Co. Ltd. &
Anr. v.
State of Assam. [1964]
5
· S.C.R. 975 and Atiahari Tea Co. Ltd. , .. State of Asram, [1961] 1 S.C.R.
809, referred to.
F
(ii) There was no material which would justify the view that the tax
\Vhich had been imposed exceeded the limit of permissible re.asonabI~ness
or was not in the public ~inte~st. Thz argun1ent that by raising the. rate of
tax the burden hod been increa•ed to 1uch an extent that the business of
the appellon:s had been virtually annihilated had no
substance.
The
operators hnd been permitted to enhance the freights and if the freights
could be enhanced, obviously, the burdeo would not fall on them. If the
G
operators were not prepared to charge higher rates as a matter of p·JJicy or
for the purpose of business cornpetifrJn that could not impin_ge on the
reasonab}l:ness of the restrictions.
This disposed of the challen.'!:e under
Art. 19(1 ){g) also and even on the assumption that th' pcofits would be
diminished or greatly reduced it could not -he held that there was any infrin·
gement of Art. 19( 1 )(g). [57 A-DJ
(iii) Under Act XVI of 1952 as amended by
Act X of 1958 the
H
G·ove.rnment could grant exemption fron1 payment of tax, by means of a
notification, in respect of any motor vehicle. running in a particular area,
and such an exemption was .i:i:iven to the operators in the Telengana region
-
A
B
NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
53
for the reason that before the extension of the Act XVI of 1952 to this
area no tax similar to the one levi·!d under that Act was payable in that
area and that thh exemption was granted under a different enactment.
Therefore, the challenge Under Art. 14 could not sucee<l. [58 A-CJ
No question of discrimination arose when taxes were being imposed
under two different sets of laws in different States or geographical areas
The laws in Madras and Aodhra Prade"'h were different and persons having
primary permits from Madras were naturally governed by the laws operating in that State [58 C-D]

## Text

52
NAZEERIA MOTOR SERVICE ETC. ETC.
A
v.
STATE OF ANDHRA PRADESH & ANR.
August 21, 1969
(J. C. SHAH,ACTING C.J., V. RAMASWAMI AND A. N. GROVER,
B
JJ.J
Constitution of India, Arts, 301, 304(b) and 19(l)(g) and Andhra
Pradesh Motor Vehicles (Taxation of Passengers and Goods) An1endn1ent
a11d Validatio11 Act XXXIV of 196!-Constit1o!io11a/ity of fares
and
freights imposed by the Act.
The appellants, motor transport operators, challenged the increase in
C
surcharge of the fares and f:><ights imposed by the Andhra Pradesh Motor
Vehicles (Taxation of Pas5"ngers and Goods) Amendment and Validation
Act, 1961. They uraed : (i) the Act was neither rel!Ulalory nor compensa·
tory in nature and it fell directly within the mischief of Art. 301 of the
Constitution; (ii) the imposts exceeded the limils of permissible reasonableness, were not in the public interest and. therefore. violated Arts. 304(b)
and 19(1)(g); and (iii) the Act violated Art. 14 (a) inasmuch as it had
not been made applicable to the Telegana area although it was appli. able
D
to the Andhra area and (b) the vehicles on inter-State routes on permits
granted by other States h;:d not bc·on subjected to tax.
HELD : · (i) It was not the contentio;1 of the State that the i'lpugned
Act imposed a tax by way of a regulatory or compensatory measure. There·
fore, it had to be ~cen \Vhether the restrictions imposed were reasonr.ble,..
and in the public interest within the n1eaning of Art. 304(b); these questions were open to examination by the court notwithstanding the fact that
E
the sanction of the Pre~ident was obtained :n-compliance with the ArfcJe.
[55 E-FJ
Mathurai Pii/ay v. S:ate of Madras. (1954) I M.L.J. 110, Automobile
Tran.roort (Raia<tlwn) Ltd. v. Stat.e of Rajasthan & Ors. [1963] I S.C.R.
49-1, Khyerbari Tea Co. Ltd. &
Anr. v.
State of Assam. [1964]
5
· S.C.R. 975 and Atiahari Tea Co. Ltd. , .. State of Asram, [1961] 1 S.C.R.
809, referred to.
F
(ii) There was no material which would justify the view that the tax
\Vhich had been imposed exceeded the limit of permissible re.asonabI~ness
or was not in the public ~inte~st. Thz argun1ent that by raising the. rate of
tax the burden hod been increa•ed to 1uch an extent that the business of
the appellon:s had been virtually annihilated had no
substance.
The
operators hnd been permitted to enhance the freights and if the freights
could be enhanced, obviously, the burdeo would not fall on them. If the
G
operators were not prepared to charge higher rates as a matter of p·JJicy or
for the purpose of business cornpetifrJn that could not impin_ge on the
reasonab}l:ness of the restrictions.
This disposed of the challen.'!:e under
Art. 19(1 ){g) also and even on the assumption that th' pcofits would be
diminished or greatly reduced it could not -he held that there was any infrin·
gement of Art. 19( 1 )(g). [57 A-DJ
(iii) Under Act XVI of 1952 as amended by
Act X of 1958 the
H
G·ove.rnment could grant exemption fron1 payment of tax, by means of a
notification, in respect of any motor vehicle. running in a particular area,
and such an exemption was .i:i:iven to the operators in the Telengana region
-
A
B
NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
53
for the reason that before the extension of the Act XVI of 1952 to this
area no tax similar to the one levi·!d under that Act was payable in that
area and that thh exemption was granted under a different enactment.
Therefore, the challenge Under Art. 14 could not sucee<l. [58 A-CJ
No question of discrimination arose when taxes were being imposed
under two different sets of laws in different States or geographical areas
The laws in Madras and Aodhra Prade"'h were different and persons having
primary permits from Madras were naturally governed by the laws operating in that State [58 C-D]
CIVIL APPELLATE JURISDICTION :
Civil Appeals Nos. 69,
112 and 113 of 1968.
Appeal from the judgment an:! order dated October 25, 1962
c
of the Andhra Pradesh High Court in Writ Petitions Nos. 1307,
1305 and 1353 of 1961.
K. Srinivasamurlhy and Naunit Lal, for the appellants (in all
the appeals) .
P. Ram Reddy and P. Parmeshwara Rao, for the respondent
o
No. 1 (in all the appeals).
E
F
G
The Judgment of the Court was delivered by
Grover, J, These appeals by certificate from a judgment of
the Andhra Pradesh High Court which disposed of several petitions under Art. 226 of the. Constitution including the petitions
filed 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 XX:Xlv of 1961.
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.
In 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 payable under
the Madras Motor Vehicles Taxation Act, 1931. Under that Act
the operators were payin[ tax of Rs. ~0 per seat per auarter. The
validity of Act 16 of 1952 was challenged before the Madras High
Court. In Mathurai Pillai v. The State of Mad•as(') its validity
was upheld excent as to the proviso to s. 3 of the Act. After the
formation of Andhra Pradesh State the Governor promulgated an
Ordinance amending Madras Act 16 of 1952 in the light of the
(1) (1954) I.M.L.J. 110.
54
SUPREME COURT REPORTS
(1970] 2 S.C.R.
above judgment. The provisions contained in the Ordinance were
A
subsequently re-enacted as President's Act 11 of 1954. The ope-.
rators, therefore, paid taxes imposed under Act 16 of 1952 as
amended in the State of Andhra Pradesh. By means of Act 21
of 1959 the legislature of Andhra Pradesh amended Act 16 of
1952.
Section 3 of Act 16 of 1952 as amended read as follows:
B
"In cl. (a) of sub-rule (i) of rule 1 in the schedule
to the Principal Act, for the words '37 np. per seat per
year per mile the words Rs. 1.48 np. per seat per year
per mile and for the words Rs. 12.50 np. per seat per
quarter the word Rs. 50/- per seat, per quarter shall be
substituted and cl. (b) of the said Sub-rule for the words
C
Rs. 22.50 up. per month the words Rs. 45/- per month
shall be substituted."
The validity of the Amending Act 21 of 1959 was challenged by
means of writ petitions before the High Court. A Division Bench
struck down the impugned provisions as unconstitutional and ultra
vires on the ground that since that 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
n.ecessary 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('). 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
action taken under Act 21 of 1959 and Act 22 of 1959. It empowered the Government to levy
additional tax at the rate of
Rs. 50/- per seat per quarter from May 8, 1959 to January 16,
1961. Thereafter from January 17, 1961 to November 3, 1961
the rate was fixed at Rs. 12.50 per seat per quarter. After the
commencement of the Validating Act 34 of 1961 the rate was
to be Rs. 37.50 per seat per quarter. This 'was to be operative
till April 1, 1962 when th~. Act would cease to have any effect.
The validity and constitutionality of Validating Act 34 of
1961 were challenged by means of various petitions under Art.
226 of the Constitution.
It was sought to be contended before
the High Court that the impugned legislation was not regulatory
in character: The sole object was to augment the revenues of
the State.
This brought the statute within the mischief of Art.
(1) [19611
I. An. W.R. 351.
D
E
F
G
H
,.
A
Il
c
E
F
G
H
NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
5 5
301 of the Constitution.
The High Court was of the view that
the question whether the statute was regulatory or compensatory
was· relevant in the context of Part XIII of the Constitution only
in the event of non-compliance with the proviso to Art. 304(b)
of the Constitution.
As the previous sanction of the President
had been obtained in terms of the proviso such pc•ints could no
longer be canvassed.
The challenge on the ground of Art. 14
before the High Court also failed.
An argument was addressed
that the impugned Act was repugnant to Art. 19(1)(g) of the Constitution. The reasonableness of the restriction wiihin the meaning of 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 th~ following points
before us :
(I) 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 though there had been compliance with the proviso to Art. 304(b) m the matter of obtaining the
requisite sanction it was open to the court to go into
the question of reasonableness both with reference to
the aforesaid provision and Art. 19(1)(g) read with
clause ( 6) of that Article.
The court was equally
entitled to determine whether the imposition was in
the public interest.
(3) The impugned Act violate_: Art. 14 of the Constitution and was discriminatory inasmuch as (a) it had
not been made applicable to the Telengana area although it was applicable to the Andhra area and (b)
the vehicles on inter-State routes on permits granted
by other ~tatBs had not been subjected to tax.
In order to decide these points the principles which have been
settled by this Court with regard to Art. 301 and Art. 304(b)
may be .noticed. According to the majority view in Automobile
Transport (Rrzjasthan Ltd. v. The State nf Rajasthan & Others(')
if a tax is compensatory in character it cannot be said to fall
within the mischief of Art. 301. Subba Rao J., (as he then was)
(1) [1963]• l S.C.R. 491.
56
SUPREME COURT REPORTS
(1970]2 S.C,R.
who concurred in the majority decision out delivered a separate
judgment pre{erred to rest his view on the regulatory nature of
such taxing statute as would escape the mischief of Ari. 301. In
Khyerbari Tea Co. Ltd. & Anr. v. The State of Assam(') the difference between the vi.ew expressed in the Automobile Transport
(Rajasthan) case(') and an earlier decision in Atiabari Tea Co.
Ltd. v. The State of Assam & Others(') with regard to the scope
and effect of the provisions of Art. 304(b) was noticed . It was
ooserved that according to the majority view expressed in Atiabari
Tea Co. ca>e(') 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 Co'llpensatory in cbnacter.
On the other hand, according to the majority decision in the
Automobile Transport (Rajasthan) (') case con;pensatory taxation would be outside Art. 301
and cannot fall under Art.
304 ( b). since it was not urged that the tax was of a compensatory
nature in Khyerbari Tea Co. Ltd.(') case this Court proceeded
to examine whether the restrictions imposed by the statute impugned in that case were reasonable and in public interest within
the meaning of Art. 304(b). The effect of compliance with the
provisions of the proviso to Art. 304(b) by .obtaining the previous
sanction of th~ President to the Bill was also considered and it
has been laid down that notwithstanding the sanction the question
of the restrictions being reasonable and in public interest is open
to examination by the court. The Act can be held to be valid
only if it is shown that the restrictions imposed by it are reasonable and in public interest.
It has not been contended on behalf of the State that the impugned Validating Act imposes a tax which is by way of a regulatory or compensatory measure. It has, therefore, to be seen
whether the restrictions imposed are reasonable and in public
interest within the meaning of Art. 304(b). Before the High Court
an attempt was made on behalf of the appellant< to show that by ·
raising the rate of tax the burden had been increased to such an
extent that the business of the appellants had been virtually annihilated. According to some of the affidavits filed on behalf of the
writ petitioners, profits derived in recent years did not exceed
an average of Rs. 2.000/- per stage carriage even without the
additional burden which had been imposed and th~· trnnsporters
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
. (1) [19641
5 S.C.R.975.
(2) [196312· S.C.R. 491.
(3) [19611 l S.C.R. 809.
A
B
c
D
E
F
G
H
·'
.__,.,
A
B
c
D
E
F
NAZEERIA MOTOR SERVICE v. A. P. STATE (Grover, J.)
57
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 >1ere much higher than Rs 2,000/-.
If 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 fall on the
transporters.
It was urged that owing to competition from the
railways and from operators whose vehicles had beer. registered
in the Madras State and who could charge lower rates the appellants were not in a position to collect extra fares which they had
been permitted to do. This argument also cannot hold and was
rightly repelled by the High Court on the ground that if the
operators were not prepared to charge higher rates as a matter of
policy or for the purpose of business competition that could not
impinge on the reasonableness of the restriction. Apart from a
faint attempt to repeat some of the arguments which were addressed before the High' Court on this point nothing new has been
brought to our notice which would justify the view that the tax
which has been imposed exceeds the limits of permissible reasonableness.
As regards public interest we are unable to find nor
has any attempt been made to satisfy us that the provisions of
the impugned Validating Act with regard to imposition of tax are
not in public interest.
This is sufficient to dispose of the challenge under Art. 19(1)(g)
as well. We may in this connection refer briefly to the conclusion
of the High Court which was reached on a consideration of the
affidavits filed before it. It has been found that there is no material which would warrant the conclusion that the increase in the
surcharge of the fares and freight contemplated by the impugned
Validating Act would constitute an impediment to the trade. The
utmost that could be said was that it would result in the diminution of profits.
Even on the assumption that the profits would
be diminished or greatly reduced it cannot be held that there is any
infringement of Art. 19(l)(g'.
Coming to the attack on the ground of violation of Art. 14
reference may be made to the background relaCn~ 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
Reorganisation Act, 1956. By Act X of 195~ the State of Andhra
ff
Pradesh amended Act XVI of 1952 inter alia extending that Act
to the Telengana area. This Act (Act X of 1958) also amended
the Principal Act by adding s. 19 according to which the
LI Sop. Cf/70-5
SUPREME COURT REPORTS
[1970) 2 S.C.lt.
-Government could grant an exemption by means of a notification
in respect of any motor vehicle running in a particular area. On
November 4, 1961 a notification was issued exempting passengers, luggage and goods carried in stage carriages from payment of
tax under the aforesaid Act within the Telengana area. There
.can be no manner of doubt that this exemption was given
to the operators in the Telengana region for the reason that before
the extension of the pi:..:ent Act to this area no tax similar to the
one levied under the parent Act was payable in that area and that
th:s exemption was granted under a different enactment.
It is
.apparent that for these reasons the challenge under Art. 14 cannot succeed.
The same is the position with regard to the tax
payable by the appellants and that which the transporters having
permits for inter-State routes have to pay. As has been pointed
·out in the affidavits filed on behalf of the State the laws in the two
-States, Madras and Andhra Pradesh are different and persons
baving primary permits from Madras are naturally governed by
1he laws operating in that State. No question of discrimination
can arise when taxes are being imposed under two different sets
·of laws in different States or geographical areas.
The appeals, therefore, fail and are dismissed with costs. One
hearing fee.
R.K.P.S. •
Appeals dismissed.
A.
B
c
D