Singh, J.:— This writ application under articles 226 and 227 of the Constitution of India has been filed by Chakardharpur Biri and Tobacco Merchants' Association and two of its members. As stated in the application, petitioner No. 1 is a registered association of biri merchants at Chakardharpur and has a total number of twenty-five merchants engaged in that trade. In this application, the petitioners have challenged the vires of Ordinance No. 107 of 1971. The petitioners have further made a prayer for quashing the notice (annexure 2) and for directing the respondents to forbear from interfering with the trade of the petitioners and from levying, realising or collecting additional sales tax under the aforesaid Ordinance or any law made in that behalf.
2. The Bihar Sales Tax Act, 1959, received the assent of the President on 28th April, 1959, and the assent was first published in the Bihar Gazette (Extraordinary), dated 1st July, 1959. Under section 3 of the Bihar Sales Tax Act, 1959, hereinafter to be called “the Act”, every dealer was made liable to pay general sales tax, special sales tax as also purchase tax subject to the other provisions of the Act. Under sub-section (3) of section 4 of the Act, the State Government was authorised by notification to exempt from the levy of general sales tax or special sales tax or both, sales of any goods or class or description of goods, sales of any goods or class or description of goods to or by any class of dealers, and any sale or category or description of sales. By notification dated 1st July, 1959, issued by the Governor of Bihar in exercise of the powers conferred by clause (a) of subsection (3) of section 4 of the Act, exemptions were made in respect of sales of goods specified in the schedule to the notification. Under the notification biri was one of the goods in respect of which exemption was made both with regard to general and special sales tax. It appears that the notification dated 1st July, 1959, was superseded and substituted by Notification No. STGL/68-12570 F.T dated 27th December, 1968, which was published in the Bihar Gazette (Extraordinary) on 28th December, 1968. Under that notification also biri was exempted from the levy of both general and special sales tax and that notification is still in force. On 19th November, 1971, the Governor of Bihar made and promulgated Bihar Ordinance No. 107 of 1971 called “the Bihar Sales Tax (Fourth Amendment) Ordinance, 1971”. By section 2 of that Ordinance, section 3B was inserted in the Act, which read as follows:
“3B. Charge of additional tax.—(1) Notwithstanding anything contained in sub-section (3) of section 4, or sections 5, 6, 6-A or 7 or in any notification issued thereunder, every dealer liable to pay tax under section 3 or section 3A shall, with effect from the 1st December, 1971, pay an additional tax at such rate, not exceeding one per centum of his gross turnover, as the State Government may, from time to time, by notification in the official Gazette, fix:
Provided that in the case of declared goods, as defined in the Central Sales Tax Act, 1956 (Act 74 of 1956),—
(i) where the tax payable under section 3 or section 3A equals the maximum amount of tax permissible under section 15 of that Act, no additional tax shall be payable under this section;
(ii) where the additional tax under this section together with the tax payable under section 3, or section 3A would exceed the maximum amount of tax permissible under section 15 of that Act, the additional tax shall stand reduced to such amount as, together with the tax payable as aforesaid, equals the said maximum amount.
(2) The State Government may, by notification and subject to such conditions and restrictions as it may impose, exempt from the levy of additional tax any turnover in respect of any goods, or class or description of goods.”
3. By section 3 of the Ordinance the original sub-section (1) of section 9 of the Act was substituted. The new sub-section (1) of section 9 read as follows:
“No dealer, who is liable to pay tax under section 3 or section 3A or additional tax under section 3B shall sell or purchase goods unless he has been granted and is in possession of a valid registration certificate.”
4. As stated in paragraph 14 of the application, after the promulgation of the Ordinance, the Assistant Superintendent of Commercial Taxes, Chaibassa, visited the business premises of some of the biri merchants of Chaibassa, who are the members of the Chakardharpur Biri and Tobacco Merchants' Association (petitioner No. 1), hereinafter to be called “the Association”, and asked them to get themselves registered under the Act. They were further informed by him that they would be liable to pay a sum of 25 paise on the sale of every hundred rupees of biris. On getting that information the secretary of the association wrote a letter to the Superintendent, Commercial Taxes, Chaibassa, making enquiries about the matter and asked for copies of the Ordinance, notifications, etc. A copy of that letter has been marked as annexure 1 to the application. It is alleged that no reply to that letter was received by petitioner No. 1. Subsequently petitioners 2 and 3 and other merchants of biri, who are members of petitioner No. 1, received from the Superintendent of Commercial Taxes, Chaibassa Circle, Chaibassa, a notice dated 19th February, 1972, under section 14 and various other sections of the Act on 22nd February, 1972. A copy of the notice which was sent to respondent No. 2 has been made annexure 2 to the application. It is said that petitioner No. 1 thereupon wrote to the Financial Commissioner and ex-officio Secretary to Government of Bihar on 28th February, 1972, protesting against the same and drawing the attention of the authorities to the unreasonableness of the levy. A copy of that letter has been made annexure 3 to the application. It is further said that similar letters were sent by petitioners 2 and 3 and other members of the association, who had received such notice on 1st March, 1972, to the Superintendent of Commercial Taxes, Chaibassa Circle, Chaibassa. A reply was, however, received from the State authorities by the secretary of petitioner No. 1 stating that due to the financial stringency it was not possible for the State Government to make exemption from the payment of additional tax. It may be stated here that in the counter-affidavit filed on behalf of the State it has been stated that the notice (annexure 2) is really a notice only under section 16(5) of the Act and not under section 14 and other sections of the Act, since the petitioners were liable to pay additional tax under the Act and had wilfully failed to apply for registration under section 9 of the Act. It must, therefore, be taken that the notice which was issued to petitioners 2 and 3 and other merchants, who are members of the association, was only under section 16(5) of the Act.
5. Mr. B.C Ghose, learned counsel appearing for the petitioners, in his opening argument had raised a preliminary point which may be disposed of He submitted that Ordinance No. 107 of 1971 lapsed on 1st May, 1972, and that should be sufficient ground for quashing the notice (annexure 2). He made the submission on the footing that the Bihar Legislature sat till 20th March, 1972, and as such the Ordinance expired after six weeks from that date. There is no substance in the preliminary point which has been taken by Mr. Ghose. As I have already stated, Bihar Ordinance No. 107 of 1971 was promulgated by the Governor of Bihar on 19th November, 1971, when admittedly the Legislature was not in session. After the general election, the session of the Bihar Legislative Assembly commenced from 22nd March, 1972. On 12th April, 1972, the Assembly was adjourned and on 13th April, 1972, the Council, was adjourned (these dates have been supplied by Mr. Ghose and accepted on behalf of the State). By Notification No. LG 5-01/71-Leg. 308 dated 14th April, 1972, which was published in the Bihar Gazette (Extraordinary) on 15th April, 1972, the Bihar Legislative Assembly was prorogued from 14th April, 1972. The Bihar Legislative Council was prorogued on 3rd May, 1972. It appears that Ordinance No. 28 of 1972 was promulgated by the Governor on 22nd April, 1972, and was published in the Bihar Gazette dated 25th April, 1972. By this Ordinance, Ordinance No. 107 of 1971 was repealed. On 29th April, 1972, the Bihar Legislative Assembly was summoned to meet on 17th May, 1972. The session of the Bihar Legislative Assembly commenced from 17th May, 1972, and that of the Bihar Legislative Council commenced from 24th May, 1972. The Assembly was adjourned on 29th June, 1972, and the Council was adjourned on 30th June, 1972. The Bihar Legislative Assembly was prorogued on 30th June, 1972, and the Bihar Legislative Council was prorogued on 5th July, 1972 (these dates have also been supplied by Mr. Ghose and accepted on behalf of the State). Ordinance No. 77 of 1972 was promulgated by the Governor on 30th June, 1972, and it was published in the Bihar Gazette dated 3rd July, 1972. By this Ordinance, Ordinance No. 28 of 1972 was repealed. It is clear that before the expiry of Ordinance No. 107 of 1971 another Ordinance, namely, Ordinance No. 28 of 1972 was promulgated by the Governor when the Legislature was not in session. When confronted with that position, Mr. Ghose raised an argument that Ordinance No. 77 of 1972 was promulgated before the prorogation of the Bihar Legislative Assembly. This argument was raised mainly because of the date of prorogation of the Assembly and the date of promulgation of Ordinance No. 77 of 1972 is 30th June, 1972. It is difficult to accept the contention of Mr. Ghose for the reasons which I am going to state. The Governor of Bihar prorogued the Bihar Legislative Assembly in exercise of the powers conferred on him by sub-clause (a) of clause (2) of article 174 of the Constitution of India on 30th June, 1972, by Notification No. 617-Legislative dated 30th June, 1972. That notification was published in the Bihar Gazette (Extraordinary) on 30th June, 1972. The Governor promulgated the Ordinance on 30th June, 1972, under Notification No. 632-Legislative and it was published in the Bihar Gazette (Extraordinary) dated 3rd July, 1972. As the number of the notification by which the Legislative Assembly was prorogued is 617 and the notification by which Ordinance No. 77 of 1972 was promulgated is 632, there is a clear indication that the Ordinance was promulgated by the Governor after he prorogued the Assembly. Apart from that, the preamble of the Ordinance shows that the Bihar Legislative Assembly was not in session when the Ordinance was made. It must, therefore, be presumed that the Governor promulgated the Ordinance on 30th June, 1972, only after he passed the order proroguing the Bihar Legislative Assembly on 30th June, 1972. Mr. Ghose submitted before us that in the absence of any counter-affidavit on behalf of the State that Ordinance No. 77 of 1972 was promulgated by the Governor after he passed the order proroguing the Bihar Legislative Assembly, his contention should be accepted. In my opinion, the State was not bound to make such a statement in the counter-affidavit when the petitioners themselves did not file any supplementary affidavit alleging that Ordinance No. 77 of 1972 was promulgated by the Governor before the prorogation of the Bihar Legislative Assembly.
6. Another contention was raised by Mr. Ghose relating to Ordinance No. 77 of 1972. Learned counsel submitted that Ordinance No. 77 of 1972 came into operation on the midnight of 29th June, 1972, by virtue of the provisions of section 6(2) of the Bihar and Orissa General Clauses Act. The Bihar Legislative Assembly having been prorogued on 30th June, 1972, and the Bihar Legislative Council having been prorogued subsequently on 5th July, 1972, on the midnight of 29th June, 1972, both the Houses of the Legislature were in session. That being the position, it should be held that Ordinance No. 77 of 1972 came into operation at a time when both the Houses of the Legislature were in session. There is absolutely no merit in this contention. Section 6 of the Bihar and Orissa General Clauses Act reads thus:
“(1) Where any Bihar and Orissa Act is not expressed to come into operation on a particular day, then it shall come into operation on the day on which the assent thereto of the Governor-General is first published in the Official Gazette in pursuance of section 81 of the Government of India Act, 1915.
(1a) Where any Bihar Act is not expressed to come into operation on a particular day,—
(i) in the case of a Bihar Act made before the commencement of the Constitution, it shall come into operation, if it is an Act of the Legislature, on the day on which the assent thereto of the Governor, the Governor-General or His Majesty, as the case may require, is first published in the Official Gazette, and if it is an Act of the Governor of Bihar, on the day on which it is first published as an Act in the Official Gazette;
(ii) in the case of Bihar Act made after the commencement of the Constitution, it shall come into operation on the day on which the assent thereto of the Governor or the President as the case may require is first published in the Official Gazette.
(2) Unless the contrary is expressed, a Bihar and Orissa Act or Bihar Act shall be construed as coming into operation immediately on the expiration of the day preceding a commencement.”
7. Ordinance No. 77 of 1972 was published in the Bihar Gazette Extraordinary on 3rd July, 1972. The Ordinance, therefore, came into operation not on the midnight of 29th June, 1972, but on 3rd July, 1972, when it was published in the Official Gazette.
8. Now, I proceed to consider the main contentions which were raised by Mr. Ghose. Learned counsel submitted that the promulgation of successive Ordinances by the Governor is not a bona-fide act on the part of the Governor but a colourable exercise of the Ordinance-making powers given to him under article 213 of the Constitution and no circumstances existed which justified the Governor in promulgating the Ordinances. Article 213(1) of the Constitution provides as follows:
“(1) If at any time, except when the Legislative Assembly of a State is in session, or where there is a Legislative Council in a State, except when both Houses of the Legislature are in session, the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require:
Provided that the Governor shall not, without instructions from the President, promulgate any such Ordinance if—
(a) a Bill containing the same provisions would under this Constitution have required the previous sanction of the President for the introduction thereof into the Legislature; or
(b) he would have deemed it necessary to reserve a Bill containing the same provisions for the consideration of the President; or
(c) an Act of the Legislature of the State containing the same provisions would under this Constitution have been invalid unless, having been reserved for the consideration of the President, it had received the assent of the President.”
9. The preamble of Ordinance No. 107 of 1971 reads as under:
“Whereas the Legislature of the State of Bihar is not in session;
And whereas the Governor of Bihar is satisfied that circumstances exist which render it necessary for him to take immediate action to amend the Bihar Sales Tax Act, 1959 (Bihar Act 19 of 1959), in the manner hereinafter appearing;
Now, therefore, in exercise of the powers conferred by clause (1) of article 213 of the Constitution of India, the Governor is pleased to promulgate the following Ordinance.”
10. The preambles of the other Ordinances, namely, Ordinance No. 28 of 1972 and Ordinance No. 77 of 1972, are in similar terms. It was submitted by the learned Advocate-General on behalf of the State that it is not within the competence of courts to investigate whether the circumstances, as contemplated by Article 213(1) of the Constitution, existed which could justify the Governor in promulgating the Ordinances. The court is not competent to go into that question and to determine whether the circumstances existed for promulgating the Ordinances by applying the objective test. The learned Advocate-General further submitted that the court cannot also question the motive behind the promulgation of the Ordinances. In support of this contention reliance was placed on a Full Bench decision of the Calcutta High Court in the case of Jnan Prosanna Das Gupta v. The Province of West Bengal A.I.R 1949 Cal. 1. and on a decision of the Federal Court in the case of Lakhi Narayan Das v. The Province of Bihar A.I.R 1950 F.C 59.. In the Calcutta case, the validity of the West Bengal Security (Amendment) Ordinance (8 of 1948) was under challenge. That Ordinance had been promulgated by the Governor in exercise of the powers conferred under sub-section (1) of section 88 of the Government of India Act, 1935. The language of section 88(1) of the Government of India Act was more or less similar to the language of Article 213(1) of the Constitution of India and it read as follows:
“(1) If at any time when the Legislature of a Province is not in session the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinance as the circumstances appear to him to require:
Provided that the Governor shall not, without instructions from the Governor-General, promulgate any such Ordinance if an Act of the Provincial Legislature containing the same provisions would under this Act have been invalid unless, having been reserved for the consideration of the Governor-General, it had received the assent of the Governor-General.”
11. One of the contentions which was raised in that case was that no circumstances existed which entitled the Governor to legislate by Ordinance. It was held in that case that a court cannot go into the question whether such circumstances existed as to render it necessary for the Governor to promulgate the Ordinance. Harries, C.J, while dealing with this point observed as follows:
“By sub-section (1) of section 88, Government of India Act, it is provided that if the Governor is satisfied that such circumstances exist he may promulgate an Ordinance if at the time the Legislature is not in session. The satisfaction must be the satisfaction of the Governor and there is nothing to suggest that the courts would be entitled to question the grounds upon which the Governor was satisfied. The position is very similar to that of an emergency which entitles the Governor-General to make Ordinances. It was expressly held by their Lordships of the Privy Council in King Emperor v. Benoarilal Sarma that whether an emergency existed at the time an Ordinance was made and promulgated was a matter of which the Governor-General was the sole judge. His view that there was an emergency justified and authorised the Ordinance. In this case, their Lordships followed an earlier decision of the Privy Council, Bhagat Singh v. King Emperor. In my view, these cases apply with equal force to section 88(1), Government of India Act, and, therefore, whether circumstances existed requiring immediate action was a matter upon which the Governor was the sole judge.”
12. The learned Chief Justice further observed as follows:
“It was contended however that even if in ordinary cases the court could not question the satisfaction of the Governor, nevertheless it could do so if the Governor himself had stated his reasons. If the matter is one for the Governor and the Governor alone, I do not think that this court could hold that there were no sufficient reasons for promulgating an Ordinance even if the Governor stated the reasons which satisfied him that urgent legislation was necessary. That being so, this court cannot go into the question whether circumstances did or did not exist which entitled the Governor to act under sub-section (1) of section 88, Government of India Act.”
13. The contention that the Ordinance was not made in good faith was repelled by the following observation:
“But if this court cannot question the sufficiency of the grounds upon which the Governor was satisfied that urgent legislation was necessary, I think it would be very difficult for any court to say that the Ordinance was not passed in good faith. The preamble gives the reason why it was passed, namely, the removal of doubts as to the meaning of one of the most important and crucial sections in the Security Act.”
14. In the Federal Court case, referred to above, the validity of the Bihar Maintenance of Public Order Ordinance (4 of 1949) was under challenge. In that case also it was contended that no circumstances existed as contemplated by section 88(1) of the Government of India Act which could justify the Governor in promulgating the Ordinance. B.K Mukherjea, J., who spoke for the court, observed as follows:
“The language of the section shows clearly that it is the Governor and the Governor alone who has got to satisfy himself as to the existence of circumstances necessitating the promulgation of an Ordinance. The existence of such necessity is not a justiciable matter which the courts could be called upon to determine by applying an objective test. It may be noted here that under the Government of India Act the Governor-General has powers to make Ordinances in cases of emergency: vide section 42, Government of India Act and section 72 of Schedule IX which is now omitted; and it was held by the Privy Council in Emperor v. Benoarilal and Bhagat Singh v. Emperor, that the emergency which calls for immediate action has to be judged by the Governor-General alone. On promulgating an Ordinance, the Governor-General is not bound as a matter of law to expound reasons therefor, nor is he bound to prove affirmatively in a court of law that a state of emergency did actually exist. The language of section 88 postulates only one condition, namely, the satisfaction of the Governor as to the existence of justifying circumstances, and the preamble to the Ordinance expresses in clear terms that this condition has been fulfilled. The first contention of the appellants must, therefore, be rejected.”
15. Mr. B.C Ghose when confronted with the two decisions urged that the decisions in the two cases, referred to above, are no longer good law and binding in view of the decision of the Supreme Court in the case of Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp. Cas. 639 S.C; A.I.R 1967 S.C 295.. In that case, the Secretary of the Company Law Board had issued an order on behalf of the Company Law Board made under section 237(b) of the Companies Act, 1956, appointing four persons as inspectors for investigation of the affairs of the Barium Chemicals Ltd., since its incorporation in the year 1961 and to report to the Company Law Board, inter alia, “all the irregularities and contraventions in respect of the provisions of the Companies Act, 1956, or of any other law for the time being in force and the person or persons responsible for such irregularities and contraventions”. The order of the Board was challenged on certain grounds, one of the grounds being that the order was made mala fide and the other ground being that in making the order the Board had acted on materials extraneous to the matters mentioned in section 237(b) of the Companies Act. Section 237 of the Companies Act, 1956, reads thus:
“Without prejudice to its powers under section 235, the Central Government—
(a) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if—
(i) the company, by special resolution, or
(ii) the court, by order, declares that the affairs of the company ought to be investigated by an inspector appointed by the Central Government; and
(b) may do so if, in the opinion of the Central Government, there are circumstances suggesting—
(i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose; or
(ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or
(iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, the managing agent, the secretaries and treasurers, or the manager of the company.”
16. In that case, Hidayatullah, J., in paragraph 27 of the judgment observed as follows:
“No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. As my brother Shelat has put it trenchantly:
‘It is not reasonable to say that the clause permitted the Govern ment to say that it has formed the opinion on circumstances which it thinks exist…………’
Since the existence of ‘circumstances’ is a condition fundamental to the making of an opinion, the existence of the circumstances, if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusions of certain definiteness. The conclusions must relate to an intent to defraud, a fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind.”
17. Shelat, J., in paragraph 60 of the judgment observed as follows:
“Though an order passed in exercise of power under a statute cannot be challenged on the ground of propriety or sufficiency, it is liable to be quashed on the ground of mala fides, dishonesty or corrupt purpose. Even if it is passed in good faith and with the best of intention to further the purpose of the legislation, which confers the powers, since the authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it, it did not apply its mind to the relevant facts.”
18. Mr. Ghose submitted on the basis of the decision of the Supreme Court in that case that it is open to the court to go into the question whether the circumstances existed for promulgation of Ordinances by the Governor and impliedly the decision of the Federal Court in the case reported in Lakhi Narayan Das v. The Province of Bihar has been overruled. It is difficult to accept this contention. In the case of Barium Chemicals Ltd., their Lordships of the Supreme Court were considering an administrative order which had been passed under section 237(b) of the Companies Act, 1956, and not the legislative Act of the Governor. The principles and tests applicable to the validity of an administrative order are not applicable to the validity of a legislative Act. It is well-settled that the court is not concerned with the motive behind legislation. Reference may be made to the decision of the Supreme Court in the case of K.C Gajapati Narayan Deo v. State of Orissa. It was observed in that case as follows:
“It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the Legislature. The whole doctrine resolves itself into the question of competency of a particular Legislature to enact a particular law. If the Legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the Legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power.”
19. In the case of R.M.D.C (Mysore) Private, Ltd. v. State Of Mysore A.I.R 1962 S.C 594., the same principle was reiterated and it was observed as follows:
“It may be remarked that the court in construing and interpreting the Constitution or provisions of an enactment has to ascertain the meaning and intention of Parliament from the language used in the statute itself and it is not concerned with the motives of Parliament.”
20. In my opinion, the decision in the case of Barium Chemicals Ltd. has not impliedly overruled the decision of the Federal Court in the case reported in Lakhi Narayan Das v. The Province of Bihar, and it must be held that it is not open to the court to go into the question whether the circumstances existed or not necessitating promulgation of an Ordinance. As a court is not concerned with the motives of a Legislature in passing an enactment, the court is not concerned with the motives of a Governor in making and promulgating an Ordinance. For the foregoing reasons, the contention which has been raised by Mr. Ghose must be overruled.
21. Mr. Ghose also raised a contention to the effect that promulgation of successive Ordinances is nothing but a fraud on the constitutional power of the Governor to promulgate an Ordinance. According to Mr. Ghose, there is a distinction between the expression “fraudulent exercise of power” and the expression “colourable exercise of power”. He submitted that a court can go into the question of fraudulent exercise of power. In my opinion, there is no real distinction between the two expressions and both the expressions are inter-changeable. The court, therefore, cannot go into the question whether the Ordinances were promulgated in fraudulent exercise of the power of the Governor. I may state here that in the writ application no allegation has been made that any of the Ordinances was promulgated for a purpose other than for what it has been stated in the preamble. Merely because the two Houses of the Bihar Legislature sat for sometime during the period between the promulgation of Ordinance No. 107 of 1971 and the promulgation of Ordinance No. 28 of 1972 and the period between the promulgation of Ordinance No. 28 of 1972 and Ordinance No. 77 of 1972, no inference of fraudulent exercise of power by the Governor can be made.
22. Mr. Ghose next contended that the imposition of additional sales tax by the Ordinance impeded free trade, commerce and intercourse and offended article 301 of the Constitution. The additional sales tax, according to the learned counsel, is not a measure regulating any trade or any compensatory tax levied for the use of trading facility and as such it offends article 301 of the Constitution. article 301 of the Constitution reads as under:
“Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.”
23. In Atiabari Tea Co. Ltd. v. The State of Assam, the scope of article 301 of the Constitution was considered by the Supreme Court and three views were expressed in that decision. Sinha, C.J, expressed the view that taxation simpliciter was not within the terms of article 301 and a tax on movement of goods or passengers did not necessarily connote impediment or restraint in the matter of trade and commerce. He drew a distinction between taxation as such for the purpose of revenue on the one hand and; taxation for the purpose of making discrimination or giving preference on the other hand and held that the latter could be treated as impediment to free trade and commerce. The majority expressed the view that when article 301 provided that trade shall be free throughout the territory of India, it was the movement or transport part of the trade that must be free. Gajendragadkar, J., expressed the majority view in these words:
“Thus considered we think it would be reasonable and proper to hold that restrictions, freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301. The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld. If the said argument is accepted it would mean, for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill may indirecly affect trade or commerce. We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement?”
24. He further observed as follows:
“Our conclusion, therefore, is that when article 301 provides that trade shall be free throughout the territory of India it means that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves. It is the free movement or the transport of goods from one part of the country to the other that is intended to be saved, and if any Act imposes any direct restrictions on the very movement of such goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII. At this stage we think it necessary to repeat that when it is said that the freedom of the movement of trade cannot be subject to any restrictions in the form of taxes imposed on the carriage of goods or their movement all that is meant is that the said restrictions can be imposed by the State Legislatures only after satisfying the requirements of article 304(b). It is not as if no restrictions at all can be imposed on the free movement of trade.”
25. The third view was expressed by Shah, J., to the effect that the freedom contemplated under article 301 was freedom of trade, commerce and intercourse in all their varied aspects inclusive of all activities which constitute commercial intercourse and not merely restrictions on the movement aspect. In the case of Automobile Transport Ltd. v. The State of Rajasthan, the majority view in Atiabari Tea Company's case was accepted. It was observed by Das, J., as follows:
“We have, therefore, come to the conclusion that neither the widest interpretation nor the narrow interpretation canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case is correct, but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by article 301 and such measures need not comply with the requirements of the proviso to article 304(b) of the Constitution.”
26. Subba Rao, J., concurred with the above view and observed at page 1436 as follows:
“(1) Article 301 declares a right of free movement of trade without any obstructions by way of barriers, inter-State or intra-State or other impediments operating as such barriers. (2) The said freedom is not impeded, but, on the other hand, promoted by regulations creating conditions for the free movement of trade, such as, police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs, etc., with or without compensation.”
27. In the case of Andhra Sugars Ltd. v. State of Andhra Pradesh, the validity of section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, was challenged. One of the grounds of attack was that section 21 impeded free trade, commerce and intercourse and offended article 301 of the Constitution. In that case, it was held that section 21 did not impede the free movement or transport of goods and was not violative of article 301. Bachawat, J., in that case observed as follows:
“Under section 21, the same rate of tax is levied on purchases of all cane required for use, consumption or sale in a factory. There is no discrimination between cane grown in the State and cane imported from outside. As a matter of fact, under the Act the factory can normally buy only cane grown in the factory zone. A non-discriminatory tax on goods does not offend article 301 unless it directly impedes the free movement or transport of the goods.”
28. It was further observed in that case that “normally, a tax on sale of goods does not directly impede the free movement or transport of goods”. In the case of The State Of Madras v. N.K Nataraja Mudaliar., it was observed by Bachawat, J., as follows:
“On principle I see no distinction between a tax on intra-State and a tax on inter-State sales. An intra-State sale may occasion the movement of goods from one part of the State to another part of the same State. Indeed, normally, an intra-State sale would occasion such movement, because the purchaser has to move the goods from the seller's place to some other place. An intra-State sale may also be effected by a transfer of documents of title to the goods during their movement from one part of the State to another part of the same State. But, there can be no doubt that a tax on such sales would not normally offend article 301. That article makes no distinction between movement from one part of the State to another part of the same State and movement from one State to another. Now, if a tax on intra-State sale does not offend article 301, logically, I do not see how a tax on inter-State sale can do so. Neither tax operates directly or immediately on the free flow of trade or the free movement or the transport of goods from one part of the country to the other. The tax is on the sale. The movement is incidental to and a consequence of the sale.”
29. He further observed that “normally a law imposing a tax on intrastate sales does not offend article 301”. In the case of Hansraj Bagrecha v. State of Bihar, the validity of section 3A of the Bihar Sales Tax Act, 1959, which was incorporated by the Bihar Finance Act, 1966, with effect from 1st April, 1967, was challenged. Section 3A provides as follows:
“The State Government may from time to time, by notification, declare any goods or class of goods to be liable to purchase tax on turnover of purchases:
Provided that general sales tax and special sales tax shall not be payable on the sale of goods or class of goods declared under this section.”
30. By a notification dated 14th September, 1966, the Governor of Bihar declared “jute” as a commodity liable to purchase tax at the rate specified in the notification. It was contended in that case that since section 3A by providing for the levy of purchase tax imposed a restriction on the freedom of trade, commerce and intercourse and on that account violated the freedom of trade guaranteed by article 301, it could be saved only if it was a legislation of the nature contemplated by article 304(b) and the Bill which was enacted into the Act received the previous assent of the President. It was observed by the Supreme Court as follows:
“12. Imposition of tax of the nature of purchase tax does not by itself restrict freedom of trade, commerce or intercourse. Imposition of tax may in certain circumstances impede free flow of trade, commerce or intercourse. But every tax does not have that effect. Imposition of a purchase tax by the State does not by itself infringe the guarantee of freedom under article 301.
31. The argument that imposition of sales or purchase tax must be regarded in all cases as infringing the guarantee of freedom under article 301 cannot be accepted as correct.”
32. Thus, it is well-settled (1) that the freedom of trade declared in article 301 is against the imposition of barriers or obstructions within the State as well as inter-State; (2) that the restrictions or impediments which directly and immediately impede or hamper the free flow of trade, commerce and intercourse fall within the prohibition imposed by article 301; (3) that only such taxes as directly and immediately restrict trade would fall within the purview of article 301; and (4) that normally a tax on sale of goods does not directly impede the free movement or transport of goods and is not violative of article 301.
33. In view of the well-settled principles stated above, it is not possible to accept the contention of Mr. Ghose that the imposition of additional tax infringes the right guaranteed under article 301 and restricts the freedom of trade, commerce and intercourse.
34. Sub-section (1) of section 42 of the Act provides as follows:
“No person shall transport from any railway station, steamer station, airport, post office or any other place, whether of similar nature or otherwise notified in this behalf by the State Government, any consignment of such goods, exceeding such quantity, as may be specified in the notification, except in accordance with such conditions as may be prescribed and such conditions shall be made with a view to ensuring that there is no evasion of tax payable under this Act.”
35. It appears that a notification dated 19th June, 1971, was issued under section 42(1) of the Act and it was published in the Bihar Gazette, Extraordinary, on 26th June, 1971. Under the notification the transport of goods specified in the second column of Schedule I exceeding the quantity specified in the corresponding entry in the third column of the said schedule from all railway stations, railway city booking office, railway goods yards and parcel sheds situated in the State of Bihar as well as all steamer ghats together with their attached sheds and godowns and also from across or beyond the places mentioned in Schedule II except in accordance with the conditions prescribed in rule 31 of the Bihar Sales Tax Rules, 1959, was banned. One of the goods mentioned in the second column of Schedule I was biri leaves and the quantity specified in the corresponding entry in the third column of the said schedule was 5 bales. Mr. Ghose contended that the Ordinance read with the notification issued under section 42(1) of the Act restricted the free movement of trade in biris and contravened article 301 of the Constitution. It is difficult to appreciate this argument. Under the notification issued under section 42(1) of the Act there has been a ban not on the free movement of biris but on the free movement of biri leaves. The petitioners are not dealers in biri leaves and as such they are not affected by the notification. Secondly, the notification has been issued under section 42 of the Act which has been enacted with the assent of the President.
36. Mr. Ghose referred to a notification dated 1st January, 1972, under which an excise duty has been levied on unmanufactured tobacco. According to Mr. Ghose, since a regulatory duty of excise has already been imposed by the Central Government, the imposition of additional tax would be an additional burden and would attract the provisions of article 301 of the Constitution. There is no substance in this contention also. I have already expressed the view that the imposition of additional tax does not amount to restriction on freedom of trade, commerce and intercourse and it does not infringe article 301 of the Constitution. Merely because the Central Government has imposed some excise duty on unmanufactured tobacco would not make any change in the legal position.
37. Now remains to consider the last contention of Mr. Ghose. Learned counsel submitted that the Ordinances are invalid because they were made and promulgated without the previous sanction of the President. Under the proviso (a) to Article 213(1) of the Constitution, instructions from the President are necessary if a Bill containing the same provisions would under the Constitution have required the previous sanction of the President for the introduction thereof into the Legislature. Mr. Ghose referred to the proviso to clause (b) of article 304 of the Constitution and submitted that under the proviso previous sanction of the President is necessary if a Bill or amendment for the purpose of clause (b) is to be introduced or moved in the Legislature of a State. So it was necessary for the Governor to receive instructions from the President for promulgating the Ordinances.
38. Article 304 reads as follows:
“Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law—
(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and
(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest:
Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.”
39. There is absolutely no substance in the contention raised. As I have already held, the imposition of additional sales tax does not infringe the right on the freedom of trade, commerce or intercourse. There was, therefore, no necessity for the previous instructions from the President for the promulgation of the Ordinances under the proviso (a) to article 213(1) read with the proviso to clause (b) of article 304 of the Constitution.
40. In the course of hearing of this writ application a notification dated 29th July, 1972, was issued under sub-section (2) of section 3B of the Bihar Sales Tax Act, 1959, which notification reads as under:
“Patna the 29th July, 1972.
S.O 727. In exercise of the powers conferred by sub-section (2) of section 3B of the Bihar Sales Tax Act, 1959 (Bihar Act 19 of 1959), the Governor of Bihar is pleased to exempt from the levy of additional tax the turnover of cotton fabrics, rayon or artificial silk fabrics, woollen fabrics, sugar and tobacco, as defined in the Additional Duties of Excise (Goods of Special Importance) Act, 1957, and hand-loom cloth including pure silk fabrics manufactured in mills and power-looms.
2. This notification shall come into force with effect from 1st August, 1972.”
41. It was fairly conceded on behalf of the State that in view of the decision in Singhbhum Tobacco and Biri Merchants' Association v. The Assistant Superintendent of Sales Tax, hand-made biris would come within the definition of “tobacco” as used in the notification and as such the petitioners and other dealers in biris would not be liable to pay additional sales tax with effect from 1st August, 1972. Thus, it is the admitted position that exemptions have been made from the levy of additional sales tax with regard to the sale of biris from 1st August, 1972. Consequently the petitioners and other dealers in biris will not be liable to pay additional sales tax on the sale of biris from 1st August, 1972, till the notification remains in force. Their liability to pay additional sales tax for the period up to 31st July, 1972, however, is not affected by the notification and they are liable to pay additional sales tax from the date when Ordinance No. 107 of 1971 came into force till 31st July, 1972. With the above observation and clarification, this writ application is dismissed. In the circumstances, there will be no order as to costs.
A.N Mukharji, J.:— I agree.
42. Application dismissed.