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Case Number

Civil Writ No. 89 of 1953

Attorney(S)

Tek Chand and A.C Hoshiarpuri,
S.M Sikri, Advocate-General,

Judges

Bhandari
C. J.
Harnam Singh, J.

Acts

ARTICLE 245 CONSTITUTION OF INDIA
SECTION 3 PUNJAB PASSENGERS AND GOODS TAXATION ACT 1952
provisions of Article 245 of the Constitution
PUNJAB PASSENGERS AND GOODS TAXATION ACT 1952
Section 100(3), Government of India Act, 1935,
S. 80A, Government of India Act, 1919,
Madras General Sales Tax Act, 1939,
Bombay Sales Tax Act, 1952,
PREVENTIVE DETENTION ACT
Bombay Sales Tax Act
MOTOR VEHICLES ACT

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Smart Summary

Structured Summary of the Opinion on Punjab Passengers and Goods Taxation Act, 1952

Factual and Procedural Background

The petition challenged the territorial competence of the State Legislature to enact the Punjab Passengers and Goods Taxation Act, 1952 (enacted 1-9-1952). The impugned statute imposed a tax where passengers are carried or goods transported by motor vehicle from outside the State to within the State, or vice versa, calculated in proportion to distance covered within the State; a proviso provided that when travel is from one place within the State to another place within the State through the intervening territory of another State, the tax shall be levied on the full fare or freight for the entire journey and a single ticket/receipt issued.

The petitioners are holders of motor vehicle permits and operate continuous services between Kalka and Simla, a 56-mile route of which 5 miles lie in Punjab and 51 miles in Himachal Pradesh and Patiala and East Punjab States Union. They filed a writ petition under Article 226 challenging the validity of the Act (including the proviso to Section 3(3)).

The Court considered preliminary locus standi objections, raised and responded to arguments on Article 23 and Article 245 of the Constitution, and examined whether the Act was within the legislative and territorial competence of the State and whether Section 3(3) was void for extra-territorial operation. The primary relief sought was a declaration of invalidity and relief under Article 226.

Legal Issues Presented

Whether the petitioners have locus standi to challenge the validity of the Punjab Passengers and Goods Taxation Act, 1952, under Article 226.
Whether the State Legislature was territorially competent to enact the Act, i.e., whether the Act is intra vires the State under the Constitution (including Entry 56 of the State List and Article 246(3)).
Whether the proviso to Section 3(3) of the Act (levying tax on the full fare where travel between two places within the State passes through another State) has an impermissible extra-territorial operation and is therefore ultra vires.
Whether any provision of the Constitution (including Articles 23 and 245) or other law renders the tax invalid.

Arguments of the Parties

Petitioners' Arguments (as presented in the opinion)

The petitioners argued the State Legislature has no power to make laws that operate beyond the State's geographical limits and that Section 3(3) (proviso) is ultra vires for imposing tax in respect of distances covered in other States.
They admitted that the tax is to be recovered from passengers or owners of goods, not the petitioners, but contended that Section 4 requires collection by the vehicle owner and payment to the State Government, which they argued infringes their fundamental rights under Article 23; Charanjit Lal v. Union of India (AIR 1951 SC 41) was cited in support.
They challenged the proviso to Section 3(3) specifically as beyond legislative competence because it would affect travel and fares involving territories of Himachal Pradesh and Patiala and East Punjab States Union.

State's Arguments (as presented in the opinion)

The State contended that the Article 23 argument was without force because Clause (2) of Article 23 permits the State to impose compulsory service for public purposes.
The State requested the Court to decide the matter definitively so that the State may recover the tax without hindrance.
The State relied on Entry 56 of the State List and Article 246(3) to support the legislative competence to tax goods and passengers carried by road.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Willoughby on the Constitution of the United States, Vol. I (Art. 13)	Principle that a statute may be assailed only by one relying on an alleged invasion of his own constitutional rights; plaintiff must show genuine proprietary interest.	Used to support the conclusion that petitioners lacked locus standi because the tax is payable by passengers/owners of goods and not by the petitioners themselves.
Charanjit Lal v. Union of India, AIR 1951 SC 41	Cited by petitioners in support of contention that compulsory collection by owners could infringe fundamental rights (Article 23).	Cited by petitioners; the Court noted the citation but held the Article 23 argument lacked force in view of Clause (2) of Article 23 permitting compulsory service for public purposes.
In re S. Mohan Kumaramangalam, AIR 1951 Mad 583	Authority for proposition that a State cannot, for purposes of Preventive Detention Act, pass orders detaining a person for activities in another State.	Recognised as correctly stating the legal proposition that a State's jurisdiction is territorial, but the Court doubted its direct bearing on the taxation issue under consideration.
In re S. V. Ghate, AIR 1951 Bom 161	Commissioner of Police had no jurisdiction to make an order against persons who were not within his jurisdiction.	Noted as illustrating territorial limits of State powers; the Court doubted its direct applicability to the present taxation question.
Darbar Patiala v. Firm Narain Das-Gulab Singh, AIR 1944 Lah 302	Provincial Legislature could not legislate for provinces outside its jurisdiction or promulgate laws of extra-territorial application.	Accepted as a correct legal proposition on territorial limits, but the Court expressed doubt whether it materially affected the taxation issue before it.
Croft v. Dunphy, AIR 1933 PC 16	General principle that States can legislate effectively only for their own territories.	Quoted to support the general observation that State jurisdiction is prima facie territorial; used as a starting point for analysis of territorial connection.
Broken Hill South Ltd. v. Commissioner of Taxation, New South Wales, 56 CLR 337 (Dixon J.)	Power to tax depends on a sufficient territorial connection; a State may make a fact or connection within its territory the basis of taxation even if the act occurs outside, provided there is a relevant connection.	Quoted at length; Court relied on Dixon J.'s formulation to hold that a sufficient territorial nexus justifies State taxation and that it is for the Legislature to determine the extent of connection relied upon.
Colonial Gas Association Ltd. v. Federal Commissioners of Taxation, 51 CLR 172	Authority cited as supportive of principles on territorial nexus for taxation.	Noted alongside other Commonwealth authorities as reinforcing the territorial-connection principle applied by the Court.
R. v. Lander, 1919 NZLR 305	Another authority cited in the context of territorial limits on legislative power.	Referred to as additional authority supporting the territorial-connection approach; Court listed it among comparative precedents.
State of Bombay v. United Motor (India) Ltd., AIR 1953 SC 252	Constitutional validity of taxation provisions depends on sufficient territorial connection rather than possession of extraterritorial powers.	Quoted to show that sales-tax need not have all transactional ingredients within the State so long as there is sufficient local activity or nexus to sustain the taxing power.
Wallace Bros. & Co. Ltd. v. Commissioner of Income Tax, Bombay, AIR 1948 PC 118	Discussed in relation to possession of extraterritorial powers versus sufficiency of territorial connection.	Referred to in support of the proposition that the constitutional validity of tax provisions turns on territorial nexus rather than extraterritorial legislative capacity.
Poppatlal Shah v. State of Madras, AIR 1953 SC 274	Provincial Legislature may tax transactions concluded outside the province provided there is a sufficient and real territorial nexus with the taxing province.	Relied upon directly: Court quoted the passage and applied the territorial-nexus principle to uphold the impugned provision as not void for extra-territoriality.
Vacher and Sons Ltd. v. London Society of Compositors, 1913 AC 107 (Lord Macnaghten)	Judicial role is to expound language of the statute, not to cavil at legislative policy; courts should not substitute policy judgment for Legislature.	Quoted to emphasize that issues of policy (e.g., extent of taxation) are for the Legislature; the Court's role is statutory interpretation and judicial review for excess of constitutional authority only.

Court's Reasoning and Analysis

The Court proceeded in two related strands: (A) jurisdictional standing (locus standi), and (B) territorial competence/substantive validity of the Act (including the proviso to Section 3(3)).

A. Locus Standi

The Court first observed established authority that a statute may be challenged only by a person who relies on an alleged invasion of his own constitutional rights; the invasion must affect genuine proprietary interests (citing Willoughby). Because the tax imposed by the statute is payable by passengers or owners of goods (and the petitioners admitted that recovery would fall on those other persons), the petitioners were held to lack the necessary personal interest to challenge the statute. The Court therefore indicated that the petition could be dismissed on the short ground of want of locus standi.

The petitioners attempted to meet this by invoking Article 23, contending that Section 4 (requiring vehicle owners to collect and pay the tax) infringed their rights; Charanjit Lal was cited. The State argued Clause (2) of Article 23 permits compulsory service for public purposes and that the Article 23 contention lacked force. The Court accepted that the Article 23 argument was not sufficient to defeat competence and proceeded to consider the substantive question.

B. Territorial Competence and Substantive Validity

The Court framed the principal question as whether the Act is repugnant to the Constitution, and articulated a four-part enquiry necessary to decide whether a State tax has been lawfully imposed:

Whether the statute was enacted for the State or any part thereof (i.e., for the purposes of the State);
Whether the subject falls within an entry of the State List (here, entry No. 56: taxes on goods and passengers carried by roads or inland waterways);
Whether the person, property or business to be taxed is within or associated with the State (sufficient territorial connection); and
Whether anything in the Constitution or other law indicates the tax is invalid.

Applying these criteria, the Court found:

The tax was imposed for the purposes of the State and falls under Entry 56 of the State List; the Legislature therefore had power to legislate on this subject (Article 246(3) and the Seventh Schedule were referenced).
Goods and passengers carried from one place in the State to another constitute a sufficient territorial connection.
There was nothing in the Constitution or other law shown that invalidated the tax per se.

The Court engaged with the petitioners' specific contention that the tax impermissibly charged on fares/freight attributable to journeys through other States (Himachal Pradesh and Patiala & East Punjab States Union). It accepted the established propositions from comparative and Indian authority (quoted from Dixon J., Privy Council decisions, and Supreme Court decisions) that a State's taxing power depends on a sufficient territorial nexus: where a connection exists the Legislature may make that connection "the occasion" for imposing liability, and it is for the Legislature to determine the extent of the connection it will rely upon.

The Court emphasized that the Legislature's choice to assess tax on the full fare or freight for the entire journey (in the specific factual situation where travel is from one place in the State to another through intervening State territory) was a method of assessment and a policy choice within legislative competence. The mere fact that the State charges a heavier tax by adopting that assessment method did not render the tax invalid if otherwise within competence.

The Court also addressed subsidiary objections (paragraph 15 of the petition) and stated they should be directed first to appropriate administrative authorities, observing that Article 226 should generally be invoked only after other remedies are exhausted.

Justice Harnam Singh, in separate concurring observations, discussed Article 245 and reiterated that Clauses (1) and (2) of Article 245 show that the Constitution did not intend State laws to have extra-territorial operation; but after examining Section 3(3) and the proviso, he concluded the Legislature had selected as the subject of taxation persons/things/circumstances within its territory and that the proviso operates where passengers are carried or goods transported from one place within the State to another place within the State. He applied the territorial-nexus authorities (including Dixon J. and Poppatlal Shah) and concluded the provision was not void for extra-territoriality.

Holding and Implications

Holding:

DISMISSED WITH COSTS — The primary writ petition under Article 226 was dismissed with costs. The Court held that the Punjab Passengers and Goods Taxation Act, 1952 was within the legislative and territorial competence of the State and that Section 3(3) (including the proviso levying tax on the full fare in journeys within the State that pass through another State) was not void for extra-territoriality.

Implications:

Direct effect on the parties: the petitioners' challenge failed; the tax statute remains valid and enforceable against those upon whom the statute imposes the tax (passengers or owners of goods), and recovery mechanisms envisaged by the statute (including collection by vehicle owners where provided) stand.
On broader legal doctrine: the Court reaffirmed the territorial-nexus principle — that a State may constitutionally impose a tax where there is a sufficient and real territorial connection between the taxing State and the object of taxation, and that the Legislature has discretion to determine the mode of assessment once competence exists. The opinion emphasized judicial restraint regarding policy choices of the Legislature (quoting Vacher & Sons).
The Court noted no new precedent was announced that departs from the established territorial-nexus approach; rather, existing authorities were applied to the facts to uphold the statute.

This summary is confined strictly to the content and language of the provided opinion and does not add facts, inferences, or interpretations beyond what the opinion itself expressly states.

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Surrendra Transport And Engineering Co., Ltd., Kalka, And Others, Petitioners. v. State Of Punjab, .

1. The question which falls to be determined in the present case is whether it was within the territorial competence of the State Legislature to enact the measure known as "The Punjab Passengers and Goods Taxation Act, 1952".

2. The petitioners are holders of permits under the Motor Vehicles Act and their vehicles are continuously engaged in carrying goods and passengers between Kalka and Simla, over a route 56 miles long, 5 miles of which passes through the territory of the Punjab and the remaining 51 miles through the territories of Himachal Pradesh and Patiala and East Punjab States Union.

3. On 1-9-1952 the State Legislature enacted a measure called "The Punjab Passengers and Goods Taxation Act, 1952" which provided that where passengers are carried or goods transported by a motor vehicle from any place outside the State to any place within the State, or from any place within the State to any place outside that State, a tax shall be payable in respect of the distance covered within the State and shall be calculated on such amount as bears the same proportion to the total fare or frieght as the distance covered in the State bears to the total distance of the journey. Then follows a proviso to which objection has been taken and which is in the following terms:

"Provided that where passengers are carried or goods transported by a motor vehicle from any other place within the State, to any other place within the State through the intervening territory of another State, the tax shall be levied on the full amount of the fare or frieght payable for the entire journey and the owner shall issue a single ticket or receipt, as the case may be, accordingly."

4. The petitioners have presented an application under Article 226 of the Constitution and challenged the validity of the Act.

5. This petition can be dismissed on the short ground that the petitioners have no locus standi to challenge the validity of the Act, for it has been held repeatedly that a statute may be assailed only by one relying on an alleged invasion of his own constitutional rights. The invasion must affect his interests adversely and this interest must be a genuine proprietary interest and not merely a remote interest, vide Art. 13 of Willoughby on the Constitution of the United States, Vol. I. The tax in the present case is to be paid not by the petitioners who are plying their vehicles on hire but by the passengers who are carried or by the owners of the goods which are transported and it seems to me, therefore, that the present petition is incompetent.

Mr. Tek Chand who appears for the petitioners admits that the tax is to be recovered from certain, other persons and that those persons alone can challenge the validity of the Act, but he contends that as Section 4 requires that the tax shall be collected by the owner of the motor vehicle and paid to the State Government and as this provision infringes the fundamental right guaranteed to his clients by Article 23 of the Constitution, it is open to the petitioners to seek redress from this Court The case of -- 'Charanjit Lal v. Union of India', AIR 1951 SC 41 (A), has been cited in support: of this contention.

Mr. Sikri, who appears for the State, replies that the plea put forward on behalf of the petitioners is devoid of force, for Clause (2) of Article 23 declares that nothing in the said Article shall prevent the State from imposing compulsory service for public purposes but he requests that this Court might pronounce upon the validity or otherwise of this measure so that the matter may be decided once, for all and that the State should be in a position to recover the tax without let or hindrance. I agree that the matter should be decided once for all and that the doubts which have arisen should be set at rest.

6. The principal question which has been somewhat obscured by the raising of a number of subsidiary issues is whether the Act of 1952 is repugnant to the provisions of the Constitution.

Mr. Tek Chand contends that in so far as the State Legislature has authorised the imposition of the tax in respect of the distance covered by motor vehicles in the territories of States other than the Punjab, the law is in violation of the provisions of the Constitution and roust, therefore, be deemed to be ultra vires, for the Legislature of a State has no power to make laws which purport to operate beyond the geographical limits of the State. Certain authorities have been cited in support of the proposition that there can be no extra-territorial execution of the laws of any State.

In 'In re S. Mohan Kumaramangalam', AIR 1951 Mad 583 (B), it was held that the State of Bombay cannot, for the purpose of Preventive Detention Act, pass orders for detaining a person found within its territory for his activities in the State of Madras or direct that such a person be interned in the State of Madras. In 'In re S. V. Ghate', AIR 1951 Bom 161 (C), also a case under the Preventive Detention Act, it was held that the Commissioner of Police had no jurisdiction to make an order against the petitioners who are not residents in Bombay and who are not within his juris diction.

In an earlier decision reported as -- 'Darbar Patiala v. Firm Narain Das-Gulab Singh', AIR 1944 Lah 302 (D), a Division Bench of the Lahore High Court held that S. 80A, Government of India Act, 1919, empowered a Provincial Legislature to make laws for the peace and good government of the territories for the time being constituting that province and the Provincial Legislature could not possibly legislate for provinces outside its jurisdiction or promulgate laws that may have extra-territorial application or affect the persons, properties or Courts beyond its jurisdiction.

While there can be no doubt in regard to the correctness of the legal proposition propounded in these authorities, I am extremely doubtful if they can have any bearing on the matters now under consideration.

7. Prima facie the jurisdiction of a State is territorial for, as pointed out by the Judicial Committee in -- 'Croft v. Dunphy', AIR 1933 PC 16 at p. 17 (E),

"it may be accepted as a general principle that (States can legislate effectively only for their own territories."

If the power of a State to impose a tax can reach only persons, property and business in the State, it is obvious that a tax can be levied by a State if the real object intended to be taxed (whether that object is a person, some species of property or some business) is within or associated 'with the State. This point was brought out with admirable clarity in -- 'Broken Hill South Ltd. v. Commr. of Taxation, New South Wales', 56 CLR 337 at p. 375 (F), where Dixon J. observed as follows:

"The power to make laws for the peace, order and good government of a State does not enable the State Parliament to impose by reference to some act, matter or thing occurring outside the State a liability upon a person unconnected with the State whether by domicil, residence, or otherwise. But it is within the competence of the State Legislature to make any fact, circumstance, occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a liability to taxation or of any other liability.

It is also within the competence of the Legislature to base the imposition of liability on no more than the relation of the person to the territory. The relation may consist in presence within the territory, residence, domicil, carrying on business there, or even remoter connection. If a connection exists, it is for the Legislature to decide how far it should go in the exercise of its powers."

(See also in -- 'Colonial' Gas Association Ltd. v. Federal Commrs. of Taxation', 51 CLR 172 at p. 187 (G) and -- 'R. v. Lander'. 1919 NZLR '305 (H)).

8. There are at least two cases decided by the Supreme Court in which similar observations were made. In -- 'State of Bombay v. United Motor (India) Ltd.', AIR 1953 SC 252 at p. 256 (I), a question arose whether the Bombay Sales Tax Act, 1952, was ultra vires the State Legislature. Patanjali Sastri C. J. observed as follows; "As pointed out by the Privy Council in --"Wallace Bros. & Co., Ltd. v. Commr. of Income Tax, Bombay', AIR 1948 PC 118 (J) in dealing with the competency of the Indian Legislature to impose tax on the income arising abroad to a nonresident foreign company, the constitutional validity of the relevant statutory provisions did not turn on the possession by the Legislature of extraterritorial powers but on the existence of a sufficient territorial connection between the taxing State and what it seeks to tax.

In the case of sales-tax it Is not necessary that the sale or purchase should take place within the territorial limits of the State in the sense that all the ingredients of a sale like the agreement to sell, the passing of title, delivery of the goods, etc., should have a territorial connection with the State. Broadly speaking, local activities of buying or selling carried on in the State in relation to local goods would be a sufficient basis to sustain the taxing power of the State, provided of course, such activities ultimately resulted in a concluded sale or purchase to be taxed."

9. A similar proposition was enunciated in ---'Poppatlal Shah v. State of Madras', AIR 1953 SC 274 (K). In this case, the validity of the Madras General Sales Tax Act, 1939, which was enacted by the Provincial Legislature in exercise of the power vested in it by Section 100(3), Government of India Act, 1935, was called into question. Mukherjea J., who delivered the judgment of the Court observed:

"It admits of no dispute that a Provincial Legislature could not pass a taxation statute which would be binding on any other part of India outside the limits of the province, but it would be quite competent to enact a legislation imposing faxes on transactions concluded outside the province, provided that there was sufficient and a real territorial nexus between such transactions and the taxing province."

10. In order to decide whether a tax has been lawfully imposed by a State, it is necessary to enquire--

(1) whether the statute by which the tax is imposed was enacted for "the State or any part thereof", that is, whether it was enacted for the purposes of the State;

(2) whether the tax fails within the description of taxation set out in an entry of the State List;

(3) whether the person, property or business to be taxed is within or associated with the State, or in other words, whether there is a sufficient territorial connection between the object to be taxed and the taxing State; and (4) whether there is anything in the Constitution or in any other law for the time being in force to indicate that the tax is not valid.

11. There can be no doubt that the tax now under consideration has been imposed for the purposes of the State and that the subject-matter of the Act falls under entry 56 of the Stale List which empowers the Legislature to make laws "for taxes on goods and passengers carried by roads or inland waterways". It is equally clear that the fact that goods and passengers are carried from one place in the State to another place in the State constitutes a sufficient territorial connection between the object to be taxed and the taxing State. Again, it is obvious that there is nothing in the Constitution or in any other law to indicate that the tax is not valid.

12. Mr. Tek Chand, however, argues that the tax is invalid as the State is endeavouring to charge a tax not only on the fare or freight payable for the journey within the territory of the Punjab but also on the fare and freight payable for the much longer journey within the territories of Himachal Pradesh and Patiala and East Punjab States Union. This argument appears to me to be wholly devoid of force. It is common ground that if was open to the State to impose a tax on goods and passengers carried by road within the territory of the Punjab.

It is also admitted that the mode, form and extent of taxation are limited only by the provisions of the Constitution and the wisdom of the Legislature. The rate at which a particular tax ought to be imposed can obviously be determined by the appropriate legislative authority and it is for that authority alone to decide what relation, if any, the tax should bear to the degree of benefit received by the taxpayer. The authority may charge a nominal tax and encourage a particular class of transactions; it may charge small tax and restrict the number of transactions; it may charge a heavy tax and prevent the transactions altogether. The mere fact that the State Legislature in the present case has imposed a tax on the full amount of the fare or freight payable in respect of the entire journey of 56 miles shows only that the State Legislature has adopted a particular method for the assessment of the tax. If the tax is otherwise valid, and there can be no doubt that it is, the mere fact that the State has decided to charge a heavy tax when it could as easily have charged a lighter one would not detract from the validity of the tax.

It has been held repeatedly that a Court should endeavour to uphold the validity of a measure unless it finds clearly that the Legislature has exceeded the authority conferred upon it by the Constitution.

13. Certain subsidiary objections have been raised in paragraph 15 of the petition but these objections should, in my opinion, be lodged before the appropriate administrative authority and not before this Court in the first instance. It has been held repeatedly that a person should invoke the help of Article 226 after all the other remedies available to him have been exhausted.

14. For these reasons, I am of the opinion that it was within the legislative and territorial competence of the State to enact the measure and that the present petition under Article 226 must be dismissed with costs. I would order accordingly.

Harnam Singh, J.

15. In agreeing that Writ Application (Civil) No. 89 of 1953 should be dismissed with costs I add a few words on the point arising, under Article 245 of the Constitution of India.

16. In Writ Application (Civil) No. 89 of 1953 the point that arises for decision is whether the Legislature of the Punjab State was competent to enact the proviso to Section 3(3), Punjab Passengers and Goods Taxation Act, 1952, hereinafter referred to as the Act.

17. That the Legislature possessed competency to make the law is plain from entry No. 56 of the Seventh Schedule read with Article 246(3) of the Constitution of India. That entry empowers the Legislature of the State to make laws on "taxes on goods and passengers carried by road or on inland waterways."

18. Basing himself on the provisions of Article 245 of the Constitution counsel for the applicants urges that Section 3(3) of the Act is invalid on the ground that it would have extra-territorial operation.

19. Article 245 of the Constitution of India reads--

"245. (1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.

(2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation."

20. Plainly, Clauses (1) and (2) of Article 245 of the Constitution show that it was not intended by the Constitution that the laws made by the State Legislature should have extra-territorial operation.

Section 3(3) of the Act reads--

* * * * (3) Where passengers are carried or goods transported by a motor vehicle from any place outside the State to any place within the State, or from any place within the State to any place outside the State, the tax shall be payable in respect of the distance covered within the State at the rate laid down in Sub-section (1) and shall be calculated on such amount as bears the same proportion to the total fare or freight as the distance covered in the State bears to the total distance of the journeys;

Provided that where passengers are carried or goods transported by a motor vehicle from any place within the State to any other place within the State, through the intervening territory of another State, the tax shall be levied on the full amount of the fare or freight payable for the entire journey and the owner shall issue a single ticket or receipt, as the case may be, accordingly."

21. In Writ Application (Civil) No. 32 of 1953 the applicants are holders of permits under the Motor Vehicles Act, and their vehicles are continuously engaged in carrying goods and passengers between Kalka and Simla over a route of fifty-six miles long, five miles of which pass through the territory of the Punjab and the remaining fifty-one miles through the territories of the Himachal Pradesh and the Patiala and East Punjab States Union.

22. As stated hereinbefore, the applicants maintain that the proviso to Section 3(3) of the Act is 'ultra vires' of the State Legislature for the reason that the State Legislature was not competent to legislate for the States of Himachal Pradesh and Patiala and East Punjab States Union.

23. Plainly, if the impugned provision purports to affect persons who are not within the State or are not connected with it by ties of domicile or residence and is in respect of things which are not within the State the provision of law is void for extra-territoriality.

24. From a perusal of the proviso to Section 3(3) of the Act, it is plain that the Legislature has selected as its subject of taxation persons, things or circumstances within its territory. Indisputably, the proviso to Section 3(3) of the Act comes into operation where passengers are carried or goods transported by a motor vehicle from any place within the State to any other place within the State. In deciding whether a law is void for extra-territoriality the sufficiency for the purpose for which it is used of the territorial connection set forth in the impugned portion of the law is to he seen.

25. In several cases it has been said that once some connection with the State appears the Legislature of that State may make that connection the occasion or subject of the imposition of a liability. In 56 CLR 337 (F), Dixon J. said at p. 375--

"But it is within the competence of the State Legislature to make any fact, circumstance, occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a liability to taxation or of any other liability. It is also within the competence of the Legislature to base the imposition of liability on no more than the relation of the person to the territory. The relation consists in presence within the territory, residence, domicile carrying on business there. or even remoter connections. If a connection exists, it is for the Legislature to decide how far it should go in the exercise of its powers."

26. In AIR 1953 SC 274 (K), B. K. Mukherjea J. delivering the judgment of the Court said-

"It admits of no dispute that a Provincial Legislature could not pass a taxation statute which would be binding on any other part of India outside the limits of the province, but it would be quite competent to enact a legislation imposing taxes on transactions concluded outside the province, provided that there was sufficient and a real territorial nexus between -such transactions and the taxing province. This principle which is based upon the decision of the Judicial Committee in AIR 1948 PC 118 (J) has been held by this Court to be applicable to sale tax legislation, in its recent decision in the Bombay Sales Tax Act case, AIR 1953 SC 252 (I) and its propriety is beyond question."

27. In the present case the liability imposed is to pay tax on the full amount of the fare or freight payable for the entire journey including the journey through the intervening territory of another State provided the passengers are carried or goods transported by a motor vehicle from any place within the State to any other place within the State.

28. But it is said that the Legislature should not have gone so far in the exercise of its powers as to affect the Himachal Pradesh and the Patiala and East Punjab States Union.

29. In the words of Dixon J. cited above if a connection exists, it is for the Legislature to decide how far it should go in the exercise of its powers. In -- 'Vacher and Sons, Ltd. v. London Society of Compositors', 1913 AC 107 (L), Lord Macnaghten said:

"But a judicial tribunal has nothing to do with the policy of any Act which it may be called upon to interpret. That may be a matter for private judgment. The duty of the Court, and its only duty, is to expound the language of the Act in accordance with the settled rules of construction. It is, I apprehend, as unwise as it is unprofitable to cavil at the policy of an Act of Parliament, or to pass a covert censure on the Legislature."

30. For the foregoing reasons I hold that Section 3(3) of the Act is not void for extra-territoriality.

Surrendra Transport ... v. State Of Punjab, .