Important Point
Proviso to Section 4 of the Himachal Pradesh Passengers and Goods Taxation Act, 1955 which makes it obligatory for the operators to pay lumpsum tax is invalid as it is beyond the scope of the Act.

Judgment

Bharucha, J.-Civil Appeal Nos. 6466-6476 of 1995 :

Under challenge by the State of Himachal Pradesh is the judgment of a Division Bench of the High Court of Himachal Pradesh delivered on writ petitions filed under Article 226 of the Constitution to challenge amendments to the Himachal Pradesh Passengers and Goods Taxation Act, 1955 and the Rules framed thereunder. The High Court allowed the writ petitions, coming to the conclusion that confining the payment of tax under the said Act to the mode of payment by lump sum made the provi­sion invalid.

2. Section 3 of the said Act is the charging section. It provides, in so far as is relevant :

“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 rates not exceeding .......as the Government may, by notification, direct,”

(Emphasis supplied.)

3. Section 4 lays down the method of collection of the tax and states that the tax shall be collected by the owner of the motor vehicle and paid to the State Government in the prescribed manner. The proviso there­to, which is under challenge, reads :

“Provided further that in case of motor vehicles (including the stage or contract carriages), other than those specified in the first provi­so, in which the passengers are carried, the State Government may assess the tax ............at lump sum, in the manner prescribed, taking into consideration the registered capacity of the vehicle and the distance travelled or to be travelled by such motor vehicles under a permit issued to such vehicles.” (Emphasis supplied.)

4. The Rule made to effectuate the said proviso, which was also the subject matter of challenge, laid down the formula for such assessment of the lump sum tax. The formula was this :

“Number of seats x number of scheduled kilometers x 3/5 x rate of passengers tax x rate per kilometer.

Explanation :-In this formula, 3/5 represents average occupancy taken at sixty per cent of the number of seats.”

(Emphasis supplied)

5. It may be mentioned that, earlier, the relevant proviso had provid­ed 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”. This proviso was challenged. This Court, in M/s. Sainik Motors, Jodhpur & Ors. v. The State of Rajasthan1, upheld the proviso for the reason that “payment of lump sum is not obligatory, and a person can elect to pay tax calculated on actual fares and freights......There is no compulsion for any operator to elect to pay a lump sum if he does not choose to do so.”

6. As far as the said Act, as it now stands is concerned, it is plain from Section 3 thereof that the levy of the tax is on “all fares......in respect of all passengers carried............”. The proviso to Section 4 that is under challenge takes into account for the purpose of assessment of the lump sum tax only “the registered capacity of the vehicle and the distance travelled or to be travelled.......”. It takes no account of “all fares...........in respect of all passengers carried........”, and it makes it obligatory for the operator to pay such lump sum tax.

7. Learned counsel for the appellant-State submitted that the said Section 4 and Rule had been so amended having regard to surveys made and data collected by the State Government and with a view to prevent tax evasion. This may be so, but there can be no generalisation of tax that can be levied under Section 3. It can only be levied with due regard to all fares in respect of all passengers carried by the par­ticular operator. No hypothetical assumption can be made about how many passengers an operator has carried. The amendment of the said Section 4, by the inclusion of the proviso quoted above, is beyond the scope of the said Act. It is, therefore, unnecessary to consider Rule 9, as