Summary
The Court upheld the amended Himachal Pradesh passengers and goods tax legislation as applicable to public sector undertakings transporting employees and their children free of charge. The validating law removed the statutory defects identified in the earlier judgment, and the levy remained a tax on passengers within State competence. Exercising Article 142 in the particular circumstances of these appellants, however, the Court confined their tax liability to 1 April 2023 onwards.
Issues
- Whether the retrospective amendments validly removed the basis of the earlier judgment excluding the appellants from the levy.
- Whether free transport of employees and their children attracted passenger tax and fell within the State legislative entry.
- From what date the appellant public sector undertakings should bear the liability.
Provisions considered
- Section 3(1A), Section 2 definitions and Schedule I, Himachal Pradesh Passengers and Goods Taxation Act, 1955The expanded definitions and notional-fare mechanism brought the appellants’ gratuitous passenger transport within the levy. (¶¶ 9, 9.1, 16, 18, 20, 22)
- Sections 8 and 9, Himachal Pradesh Passengers and Goods Taxation (Amendment and Validation) Act, 1997The retrospective amendments and validation removed the foundation of the earlier decision rather than simply declaring it ineffective. (¶¶ 9, 9.1, 10, 15, 16)
- Seventh Schedule, List II, Entry 56, Constitution of IndiaThe incidence remained on passengers carried by road even where the vehicle owner bore the tax or charged no fare. (¶¶ 7, 22)
- Article 142, Constitution of IndiaRelief was moulded for these public sector appellants by excluding demands for periods before 1 April 2023. (¶¶ 24, 25, 26)
Held
- A competent legislature may retrospectively cure the statutory defect underlying a judicial decision. It cannot merely reverse that decision by legislative declaration; the amended law here removed its foundation. (¶¶ 10, 11, 12, 13, 14, 15, 16)
- The amended definition of business was not confined to a principal passenger-transport business or a profit-making activity. The passenger exclusion for employees performing duties in connection with the vehicle did not exempt all employees of its owner or their children. (¶¶ 18, 20)
- The use of a prescribed notional fare where passengers travelled gratis did not convert the levy into a tax on motor vehicles. The statutory tax on passengers was within Entry 56 of List II. (¶¶ 22, 23)
- Given the prolonged litigation and the appellants’ provision of free transport in remote hilly areas for employees and their children, Article 142 justified liability only from 1 April 2023. This relief was tied to the circumstances of these public sector undertakings. (¶¶ 24, 25, 26)
Result
Appeals dismissed and statutory validity upheld, subject to the appellants being liable for tax only from 1 April 2023 onwards, with no demand for earlier periods. Parties to bear their own costs.