Judgment

MATHEW, J.:- In the Civil Appeals, the questions for consideration are whether the enhancement of motor vehicles tax on omnibuses imposed by G. O. No. 2044-Home dated 20 9-71 by the Government of Tamil Nadu from Rupees 30 per seat per quarter to Rs. 1001- per seat per quarter is constitutionally valid and whether the distinction made between contract carriages and stage carriages in the matter of levy of vehicle tax offends Article 14 of the Constitution.

2. The writ petitions assail the validity of the aforesaid notification on the additional ground, namely, that the tax levied under the notification imposes restrictions on the freedom of trade, commerce and intercourse guaranteed by Article 301 of the Constitution and that as the notification is not law passed after obtaining the previous sanction of the President of India. the tax is invalid.

3. We take up for consideration Writ Petition No. 253 of 1973 and the judgment therein will dispose of the Civil Appeals and the Writ Petitions.

4. The petitioner is the owner of an omnibus which has a capacity to accommodate 54 passengers. He obtained a permit on 16-5-1968 to operate it as a contract carriage and was paying tax at the rate of Rs. 30/- per seat per quarter under the Madras-Motor Vehicles Taxation Act 3 of 1931 (hereinafter called the Act,). This Act was passed with a view to abolish levy of tolls in the Presidency of Madras and the levy of taxes on motor vehicles by local bodies. The rate of tax which originally stood at Rupees 10/-per seat per quarter was increased to Rs. 30/- per seat per quarter when the system of issuing permits for omnibuses by the regional transport authorities came into vogue. The Government of Tamil Nadu by G. O. M. S. 923-Home dated 19-4-1969 increased the rate of tax with respect to omnibuses from Rs. 30/- to Rs. 50/- per seat per quarter with effect from 1-7-1969. It was announced that this measure was with a view to avoid unhealthy competition between omnibuses and regular stage carriage buses and to put down the misuse - of omnibuses. The owners of omnibuses-questioned the validity of the notification in Writ Petition No. 1412 of 1909, etc. During the pendency of those writ petitions, the government increased the rate of tax from Rs. 50/- to Rs. 100/- per seat per quarter with effect from 1-9-1970 by G. O. M. S .434-Home dated 27-2-1970. The avowed object of this measure also was to avoid unhealthy competition of omnibuses with regular stage carriages. A number of writ petitions were filed challenging the validity of this notification. By a common judgment dated 27-1-71 the High Court allowed the writ petitions and quashed the aforesaid notifications holding that the notifications were a device to eliminate the operation of contract carriages and that the notifications were not made in the exercise of the power of taxation. The result was that the rate of tax was restored to Rupees 30/- per seat per quarter.

5. Appeals were preferred against this decision to this Court.

6. Thereafter, the Government of Tamil Nadu issued G. O. M. S. 2544Home dated 201-1971 enhancing the tax from Rs. 30/ to Rs. 100/- per seat per quarter with effect from 1-7-1971. It is this G. O. which the petitioner challenges in the writ petition.

7. Counsel for the petitioner submitted, firstly, that the notification was not a measure of taxation but a device to eliminate the competition of omnibuses with stage carriages run by Government and, therefore, the tax is bad. Secondly, he submitted that the tax is neither compensatory nor regulatory in character and. therefore, the tax is a restriction on the freedom of trade, commerce and intercourse guaranteed under Art. 301 and as the notification is not a law passed with the previous sanction of the President it would not be saved by Article 304 b) In other words, the submission was that since the tax operates as restriction on the freedom of trade, commerce and intercourse within the State, it could be imposed only by a