New Delhi, May 12
In a major relief to the Himachal Pradesh Government the Supreme Court has upheld the validity of an Act passed by it 1991 for levying tax on certain goods transported by roads to generate more revenue for their maintenance. The legislation was struck down by the Himachal Pradesh High Court.
Setting aside the high court’s December 13, 1994, judgement, a Bench comprising Mr Justice M.B. Shah and Mr Justice Arun Kumar said the reason given by the high court for holding the Act as ultra vires was that it over-ruled an earlier judgement given by it in 1978 in the related matter.
“This reason cannot be sustained... it is a well-settled law that the legislature can change the basis on which a decision is rendered invalidating the Act, and, thereby validating the legislation which has been declared to be null and void (by the court),” the apex court ruled.
The state government had challenged the high court order, contending that it was passed to overcome the 1978 judgement, which had invalidated the 1976 HP Taxation (on certain goods carried by road) Act, providing levying of tax on specified goods to generate more revenue for the maintenance, construction of roads and bridges as they suffered heavy damage every year due to bad weather.
The Bench said, “The legislature under the Constitution within prescribed limits powers to make laws prospectively and retrospectively. By exercise of this power the legislature can remove the basis of a decision given by the court rendering it ineffective.”
Stating that most parts of Himachal Pradesh are not connected by railway and the hilly state has heavy downpour every year requiring more expenditure for the maintenance and construction of new roads to expand trade and commerce, the apex court said, “It is required to be held that the tax is compensatory in nature for giving better facilities to the passengers and traders.”
It would not come within the purview of the restrictions contemplated under Article 301 and 304 of the Constitution, requiring President’s prior sanction or his assent to the Act after its passage by the state legislature, the Supreme Court ruled.
One of the reasons given by the high court was that there was no sanction from the President nor he had given his assent to the Act.
Since the 1976 Act has been replaced by the 1991 legislation, it “does not survive” any more, the apex court said, adding that even otherwise the high court’s order of 1978 striking it down also “required to be set aside as it was against the settled legal position.”
