P. Jaganmohan Reddy, C.J:— Twenty-one writ petitions against the decision in which the present appeals arise were filed by the Madas State based bus operators for the issue of a writ, order or direction particularly one in the nature of a writ of mandamus from enforcing the provisions of the Andhra Pradesh Motor Vehicles Taxation Act (Andhra Pradesh Act V of 1963) (hereinafter called “The Andhra Pradesh Act.”) and Notification G.O Ms. No. 1103, Home, (Transport II) Department, dated 29th June, 1964 of the State Government, on grounds inter alia (1) the said provisions and the notification being discriminatory offend Article 14 of the Constitution as one also violative of Article 304 (b) of the Constitution, and (2) that the State of Andhra Pradesh has no legal authority to cancel the exemption given under section 9 (1). (b) of the Andhra Pradesh Act retrospectively and levy tax as from the date. Gopalakrishnan Nair, J., observed that in the large majority of the petitions, no plea of discrimination under Article 14 was at all taken and that though it was taken for the first time in the reply affidavits of the petitioners, he nonetheless considered the same, and held that the provisions of law and the notification are not discriminatory and do not offend Article 14, nor do they offend Article 301 or 304 (b) of the Constitution. He further held that the notification withdrawing the exemption retrospectively was bad and therefore the Government could not legally impose a tax on that basis.
2. Against this judgment, 8 operators, petitioners in Writ Petition Nos. 1275, 1262, 1252, 1242,’1399, 1445, 1637 and 1238 of 1964 have a filed Writ appeals, while the Government has filed writ appeals in all the 21 writ petitions in so far as it went against the Government viz, declaring the retrospective withdrawal of exemption as invalid. Mr. S. Srinivasamurthy on behalf of the appellants in W.A Nos. 29, 30, and 121 of 1965, Smt. Amareswariin W.As Nos. 31, 32, 33, Sri Kannabhiram in W.A No. 92 of 1965 and Shri K. Ramamurthy in W.A No. 87 of 1965 contended that the writ petitioners had in fact raised in their petitions the question of discrimination under Article 14, but that the learned Judge, had by inadvertence stated that it had not been raised. In a few of the earlier writ petitions it was no doubt stated that there was discrimination but there was no elaboration as to how there was discrimination. But Mr. Srinivasamurthy contends that in his writ petitions at any rate, he had urged this point specially. Be that as it may inasmuch as the learned Judge had dealt with the matter and had held that the provisions of the law and the notification do not contravene Article 14, they cannot be precluded from contesting that finding in appeal.
3. In order to understand the scope and ambit of the several contentions raised before us, it is necessary to set out the history of the controversy. The petitioners are holders of permits which enable them to ply their vehicles on inter-State routes in Madras and Andhra Pradesh. They ply in the districts of Chittoor and Nellore, which when they were in the composite State of Madras were not inter-State routes. It was only after the Andhra-State was formed in 1953 they became inter-State routes, and though the laws under which the taxes were paid were applicable to both the States, viz-, the Madras Motor Vehicle Taxation Act, 1931, and the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952, the operators of buses r.nd public carriers in Madras and Andhra States became liable to payment of tax under both the Acts. In order to obviate the hardship, the two States came to an agreement that the motor vehicles registered in each of the States will pay the taxes due under the two Acts mentioned above to that State only and that the other State will not collect any tax from the owners of those vehicles or in respect of those vehicles. In other words, the Madras based operators paid the tax under both the Acts without having to pay any further tax for operating in the Andhra. routes while the Andhra operators likewise paid tax under the said Acts to their State without having to pay any further tax for plying in the Madras State. This was the agreement which operated till the beginning of 1964. While, this agreement was continuing, in the year 1963 the Andhra Pradesh Legislature passed an Act called the Motor Vehicles Taxation Act 1963 (Andhra Pradseh Act V of. 1963) by section 18 of which the Motor Vehicles (Taxation of Passangers and Goods) Act which prevailed in that State was repealed. It may be stated that under the Madras Motor Vehicles Taxation Act, originally a sum of Rs. 30 per seat per quarter was being paid by operators who have both the routes. Similarly under the Motor Vehicles (Taxation of Passengers and Goods) Act, Rs. 25 was being paid. But subsequently by an Andhra Amendment in 1961, a sum of Rs. 37-50 per seat was being charged from Andhra operators. By Act V of 1963, what was being paid at the time of repeal under both the Acts namely Rs. 30 under the first Act and Rs. 37-50 under the second Act, were consolidated and a sum of Rs. 67-50 per seat became payable as tax. In February, or March, 1964, the Madras Government took the view that under the inter-State agreement, motor vehicles tax alone was exempt £tnd since under the new Andhra Act, the tax payable is Rs. 67-50, that would be exempt, but the Andhra operators would have to pay a surcharge under the Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 which was in operation in that State. They therefore began to insist on the levy of surcharge at Rs. 37-50 per seat on the Andhra operators as a condition of their countersigning the permits to operate on Madras Government was given retrospective effect from 1st April, 1963, the date on which the Andhra Pradesh Act V of 1963 came into force. This action of the Madras Government precipitated the matters, inasmuch as while the transport operators of Madras were only paying tax levied in their State, viz-, Rs. 45 and Rs. 25 i.e, Rs; 70-00 the Andhra operators were called upon to pay Rs. 92-50 i.e, Rs. 67-50 in that State and Rs. 25 of the Madras State as a condition of their permits being countersigned. The Andhra Pradesh Government considered this action of the Madras Government as a breach of the agreement between the two States, besides being harsh and unjust to the Andhra operators. In this view, it Was compelled to take steps to remedy the situation and give relief to the Andhra operators which it did by the impugned G.O.Ms 1103, Home, (Transport II) Department, requiring the owners of vehicles registered in the Madras State to pay Rs. 37-50 per seat per quarter in respect of stage carriage and Rs. 135 per quarter in respect of each public carrier. This Government Order was also given retrospective effect from 1st April, 1963 in like manner as the Madras Government had done by enforceing its Government Order with retrospective effect from that date. The impugned Government Order amended the previous Government Order by withdrawing totally the exemption given to the motor vehicles registered in Madras from paying the Andhra taxes and levying only Rs. 37-50, i.e, by exempting Rs. 30 of the tax leviable under the Andhra Act. The Andhra operators also had filed writ petitions in the Madras High Court challenging the Government Order issued by the Madras Go vernment whereby tax under the Motor Vehicles (Taxation of Passengers and Goods) Act was levied on the Andhra operators, as well as the retrospective operation of the Government Order. By G.O Ms. No. 1228, Home, dated 26th March, 1962, passed in exercise of the power given under section 11 of the Madras Motor Vehicles Taxation Act, the Madras Government exempted lorry owners plying on the inter State routes from liability, to tax under that Act. But the Regional Transport Officer, Vellore, construing that Government Order as only exempting tax under that Act, called upon certain inter-State lorry operators to pay surcharge under the Madras Motor Vehicles (Taxation of Passengers and Goods) Act on the assumption that the exemption in the Government Order did not cover their liability under the Act of 1952. Some of the inter-State owners filed writ petitions in 1963 which were jallowed on the ground that so long as sub-rule (5) of Rule 1, in the Schedule to the Act of 1952 was in force, no surcharge could be collected from inter-State lorry owners. This impediment was got over by the Madras Government by passing G.O Ms. No. 2724, Home, dated 24th August, 1963 issued in exercise of its powers under section 4 (2) of the 1952 Act, whereby sub-rule (5) of Rule 1, was omitted with effect from 1st April, 1962. Similarly, rules 3 and 4 were also omitted. Thereafter, in or about August, 1963, the Regional Transport Officer, Chingleput, demanded from the petitioner in W.P No. 823 of 1963 (on the file of the Madras High Court), a sum of Rs. 1,663-20 as surcharge due under the 1952 Act for the period April, 1962 to December, 1962. It was contended before Veeraswami, J., that the State Government in the exercise of its power under section 4 (2) of the 1952 Act, had no authority to repeal sub-rule (5) of rlue 1 with retrospective effect from 1st April, 1962, which the learned Judge held to be well founded.
4. In respect of the other contention, it does not appear that any question as to discrimination under Article 14 or void character of the tax as offending Article 301 or 304 (b) was argued before the learned Judge.
5. In these petitic ns the main argument of the petitioners is that inter-State operators, whose permits are granted by other States and which are being counter-signed under section 63 of the Motor Vehicles Act, are being discriminated by the State under the impugned notification in that while the operators registered in Maharashtra, Madhya Pradesh, Orissa, Mysore are not charged Rs. 37-50, operators registered in Madras are charged this amount. There is, according to the learned Advocates, no basis for this discrimination as all inter-State operators throughout the country form a class, so that if operators in some States are taxed and others not, there would be naked discrimination. Further it is submitted that the States in India do not come into the picture because it is operators that are concerned that the differences in tax on operators in different States place some of them at a disadvantage while others do not suffer that disadvantage.
6. In order to appreciate this contention, it may be necessary to state that under section 63 of the Motor Vehicles Act, vehicles registered in one State cannot ply in any other State unless the permit is countersigned by the Regional Transport Authority of that region. Sub-section (2) of that section says that a Regional Transport Authority when countersigning the permit may attach to the permit any condition which it might have imposed if it had granted the permit, and may likewise vary any condition attached to the permit by the Authority by which the permit was granted. The power authorising a Regional Transport Authority to attach any condition to a stage carriage permit is contained in section 48; but those conditions do not authorise the imposition of a tax. In the earlier batch of writ petitions, The Chit to or Motor Transport Service etc. v. The Stote of Andhra Pradesh . W.P No. 3. 1297 and batch, decided on 25th October, 1962., it was contended that the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) Act 1961, which validated the Andhra Pradesh Act XXI of 1959 empowering the Government to levy tax at the rate of 20 naya paise in the rupee from 8th May, 1959 to 16th January, 1961, as the rate of 5naye paise in the rupee between 17th January, 1961 and 3rd November, 1961 (the dateof commencement of the said Act) and there after at the rate of 15 naye paise in the rupee on the fares and freights payable to the operators of such stage carriages and on all goods transported by public carrier vehicles on and from 8th May, 1959 at the rate of 6 naye paise in the rupee on the freight payable to such operators of public carriers, was illegal, being in conflict with the concept of freedom of trade and commerce envisaged in Part XIII of the Constitution, and further that it invades the fundamental rights guaranteed under Articles 14 and 19 of the Constitution and that it was not competent for the State Legislature to validate a statute which was struck down as being void. It may be stated that the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 (hereinafter referred to as “The Principal Act”) was challenged in the Madras High Court in Muthurai Pillay v. State of Madras . 1954 M.L.J 110., Rajamannar, C.J and Venkatarama Ayyar, J., upheld its validity except as to the proviso to section 3 of the Act. After the formation of the Andhra State, the Governor of the State promulgated an Ordinance amending the principal Act deleting the proviso to section 3 which was found to be objectionable in the judgment of the Madras High Court and by providing that the said amendment should be deemed to have come into force on the 18th of September, 1953, the date on which the proviso was declared invalid. This Ordinance was subsequently re-enacted as President's Act XI of 1954, on the 13th February, 1954. With a view to further augment the revenue of the State, the Andhra Pradesh Legislature amended the principal Act by Act XXI of 1959 which came into operation on 8th May, 1959. By this Act, the rates of taxation were increased from 5 naye paise in the rupee on the fares and freights payable by the operators of stage carriage to 20 nP. in the rupee and from 3 nP. to six n.P in the rupee payable in respect of public carriers. Simultaneously, the Government in G.O.Ms No. 1077, Home, dated 7th June, 1959, issued a notification in exercise of the powers conferred by the Motor Vehicles Act, 1939, increasing the rates, fares and freights that could be collected by the owners of these motor vehicles from passengers and goods, so that the enhancement might not operate as extra burden or strain on them. This Act was assailed by some of the operators in the State in a batch of writ petitions, Venson Transport v. The State of Andhra Pradesh, as being unconstitutional and ultra vires, on the ground that it violated Article 14 of the Constitution and also that it interfered with the freedom of trade and commerce guaranteed by Part XIII of the Constitution. A division Bench of this Court upheld the objection based on Part XIII of the Constitution in the view that since the Act imposed a restriction on the operator's freedom of trade and commerce under Article 301 of the Constitution, the previous sanction of the President was necessary under the proviso to Article 304 (b) and that since it was not obtained, the Act was legally inoperative, though the legislative competence was not lacking to enact it. It was to get over this difficulty created by that judgment that a Bill was introduced in the Andhra Pradesh Legislature after obtaining the previous sanction of the Pr si-dent under the proviso to Article 304 (b). This Bill, which was later enacted as the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) Amendment and Validation Act 1961 validated the Andhra Pradesh Act XXI of 1959. In the Chlttor Motor Transport Service etc. v. The State of Andhra Pradesh the Constitutionality of this Act was questioned.
7. It may not be out of place here to state that the power of the State to impose a tax on motor vehicles cannot be denied. In Atiabari Tea Co., Ltd. v. State of Assam . 1962 2 S.C.J 676; 1963 1 M.L.J S.C 14; 1963 1 An. W.R S.C 14; 1962 3 S.C.R 391; A.I.R 1962 S.C 232., a majority of their Lordships of levying tax is essential for the very existence of the Government, its exercise must inevitably, be controlled by the constitutional provisions made in that behalf and that it cannot be said that the power of taxation per se is outside the purview of any constitutional limitations. The power of Parliament and the Legislatures of the States to make laws including laws imposing taxes, it was observed, is subject to the provisions of the Constitution and that must bring in the application of the provisions of Part XIII, and that therefore the argument based on the theory that tax laws are governed by the provisions of Part XII alone cannot be accepted. It was further observed that Article 301, read in its proper context and subject to the limitations prescribed by the other relevant Articles in Part XIII must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislatures of the State. It was further held that Article 301 applies not only to inter-State trade, commerce and intercourse but also to intra State trade, commerce and intercourse, and that the freedom of trade guaranteed by Article 301 is freedom from all restrictions except those which are provided by the other Articles in Part XIII. In that case, the Assam Legislature passed an Act called the Assam Taxation (On Goods Carried by Roads or In and Waterways) Act, 1954, acting in exercise of the powers under Entry 56 of List II, for the purpose of levying taxes on certain goods carried by read or inland waterways in the State of Assam. It was contended that the collection of the taxes on goods being solely on the ground that they are carried by read or by inland waterways within the area of the State, the Act has put a di ect restricticn on the freedom of trade, and since, in doing so, it has not complied with the provisions of Article 304 (b) nor has it been validated by the assent of the President under Article 255 (c), it must be declared to be void. Subsequently, another Act, validating the tax with retrospective operation and with the assent of the President, was passed by the Assam Legislature. The constitutionality of this Act was again challenged. It came up for consideration in Khyerbari Tea Co. v. State of Assam, before the Supreme Court which held that the State had power not only to levy the tax but to apply it retrospectiely, and in that view upheld the validating Act.
8. In Automobile Transport Ltd. v. State of Rajasthan, the State of Rajasthan levied tax on motor vehicles plying on the roads of Rajasthan and the question arose whether it violated Article 301 of the Constitution. In that case it was contended that the levy of a tax itself is a restriction on trade and commerce. The Supreme Court had to consider whether the legislation Which was questioned before them was one which regulated commerce and trade and whether the taxes were compensatory in nature for providing roads and maintaining them in the State of good repairs, thereby affording additional facilities to persons called upon to pay taxes under that Act. It was held by a majority of their Lordships that the taxes imposed under the Rajasthan Motor Vehicles Taxation Act are compensatory taxes which do not hinder the freedom of trade, commerce and intercourse assured by Article 301 and hence, the Act did not violate the provisions of the Article. It was further held that regulatory measures or measures imposing compensatory taxes for the Ase 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. S.K Das, J., at page 1420 observed thus:
“The collection of a toll or a tax for the use of a road or for the use of a bridge or for the use of an aerodrome is no barrier or burden or deterrent to traders who, in their absence, may have to take a longer or less convenient or more’ expensive route. Such compensatory taxes are no hindrance to anybody's freedom so long as they remain reasonable; but they could of course be converted into a hindrance to the freedom of trade. If the authorities concerned really wanted to hamper anybody's trade, they could easily raise the amount of tax or toll to an amount which could be prohibitive or deterrent or create other impediments which instead of facilitating trade and commerce would hamper them. It is here that the contrast, between “freedom” (Article 301) and “restrictions” (Articles 302 and 304) clearly appears; that which in reality facilitaties trade and commerce is not a restriction, and that which in reality hampers or lurders trade and Ccmmerce is a restriction. It is the reality or substance of the matter that has to be determined. It is not possible a priori to draw a dividing line between that which would really be a charge for a facility provided and that which would really be a deterrent to a trade, but the distinction, if it has to be drawn, is real and clear. For the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder themovement part of trade. So long as a tax remains compensatory or regulatory it cannot operate as an hindrance.
9. Again at page 1421, the learned Judge observed:
“In our view, the concept of freedom of trade, commerce and intercourse postulated by Article 301 must be understood in the context of an orderly society and as part of a Constitution which envisages a distribution of powers between the States and the Union, and if so understood, the concept must recognise the need and the legitimacy of some degree of regulatory control, whether by the Union or the States; this is irrespective of the restrictions imposed by the other Articles in Part XIII of the Constitution.”
10. One of the arguments advanced in the Chittor Motor Transport Service case on the basis of the above decision of the Supreme Court was that the impugned legislation cannot be deemed to be regulatory in character for the reason and that it does not regulate trade and commerce, that there is nothing in the impugned Act which suggested that it was intended to control the buisness of plying transport vehicles, its only object being to raise revenue for the State. The tax could not also be described as compensatory as by this legislation they have not been afforded additional facilities for paying these taxes. The taxes have also no relation to the manner and the extent of the user of the roads and as such, the provisions are in conflict with Part XIII of the Constitution. Repelling this contention, Chandra Reddy, C.J, speaking for the Bench said that the questions whether the statute is regulatory and whether the taxes are compensatory are relevant in the context of Part XIII, only in the absence of compliance with the proviso to Article 304 (b) of the Constitution, and that the judgment of the Surpeme Court was concerned only with a case where the proviso to Article 304 (b) was not complied with. In Automoble Transport Ltd. v. State of Rajasthan, the sanction of the President was not obtained by the Legislature, but in the Chittoor Motor Transport Service case the President's sanction was obtained, and it was for that reason Chandra Reddy, C.J, observed that the situation envisaged in the Supreme Court case did not arise in the case before them, because the conditions contained in the proviso to Article 304 (b) was satisfied.
11. It was further contended in the Chittoor Motor Transport Service case that the legislative measure is opposed to the doctrine of equality before law under Article 14 inasmuch as the operators who have obtained permits in Madras State are not subjected to heavy incidence of taxation and as such the public utilise the services of those operators plying on routes in the Andhra State because their charges are less than those of the petitioners, whose business theieby is adversely affected. This contention also was rejected by the Bench on the ground that the difference in the rates is traceable to the difference in the laws in operation in both the States; that it is not a case of the Legislature of this State making different law for a different area in the State or as applicable to different operators; that the advantages and disadvantages are the result of different laws is force in different States and that the source of authority for these two statutes being different, no complaint could be made on the ground of denial of equality of treatment. The learned Chief Justice observed:
“The power of a Court to declare a law void under Article 14 could be exercised only with reference to the legislation impugned and the laws of two different States could not be compared to show the discriminatory nature of one of them.”
12. In support of this proposition, State of Madhya Pradesh v. Mandawar, Venson Transport v. State of Andhra Pradesh . 1961 1 An. W.R 351., and East India Sandal Oil Distilleries v. The State of Andhra Pradesh . 1961 2 An. W.R 344; 1962 13 S.T.C 79., were cited. Referring to the last mentioned case it was observed that the State has a right to make a territorial classification even in rerard to fiscal measures and in fact it enjoys a greater latitude in that behalf, and that it is well settled that the Legislature has discretion to select certain areas or objects for the purpose of taxation provided it does so reasonably. In this regard support was also drawn from the case of Steelworth Ltd. v. The State of Assam . 1962 13 S.T.C 233..
13. The argument in the Chittoor Motor Transport Servire case was that there has been discrimination against the petitioners in the matter of grant of exemptions from the operation of the Act. It was stated that the Government had denied to them exemption from tax payable under the Act, which was given to persons plying stage carriages on routes in the region known as Telangana and thereby infringed the principle of equal protection of laws enshrined in Article 14. This contention also was rejected, on the ground that prior to the formation of Andhra Pradesh there was no law in the Hyderabad State imposing any tax on passengers and goods carried in motor vehicles; that notwithstanding the merger of Telangana area with Andhra area, the laws in operation in the former region continued to be in force by virtue of section 119 of the States Reorganisation Act, that while this law continued to operate in Telangana, the State of Andhra Pradesh amended the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 inter alia extending Madras Motor Vehicles (Taxation of Passengers and Goods) (Andhra Pradesh Amendment) Act, to the Telangana area, and also adding section 19 which gives power to the Government to grant exemptions of tax by notification and that the Government in exercise of those powers, issued notification dated 4th November, 1961 exempting passengers, luggage and goods carried in stage carriages from payment of tax under the said Act within the Telangana area. It was contended that the amended section 19, which has to be read into the impunged Act, confers absolute power on the Government which could be exercised to discriminate as between two sets of operators and hence inconsistent with Article 14. The Bench following the judgment in Irani v. State of Madras, held that section 19 was not unconstitutional that only individual orders of emption passed by the Government could be attacked and that at any rate the impugned notification does not make any discrimination.
14. Mr. Srinivasamurthy, however, contends that while it is true that the State cannot be denied the right to tax as a compensatory or regulatory measure and even could impose a reasonable restriction, the class of operators upon which these taxes could be levied should be treated as one throughout India and cannot be differentiated or discriminated as being operators of different States in a differential manner.
15. In support of this last contention, he goes on to argue, relying on the observations of Subba Rao, J. (as he then was) in his concurring judgment in Automobile Transport Ltd. v. State of Rajasthan, that the words “shall be free” construed in relation to the expression “throughout the territory of India”, in the guarantee contained in Article 301 of the Constitution viz., that “trade, commerce and intercourse throughout the territory of India shall be free,” demarcates the extensive field of operation of the said freedom. At page 1429 Subbarao, J. (as he then was observed):
“The said intercourse shall be free throughout the territory of India. The use of the words “Territory of India” instead of “among the several States” found in the American Constitution of “among the States” found in the Australian Constitution, removes all inter-State or intra-State barriers and brings out the idea that for the purpose of the freedom declared the whole country is one unit. Trade cannot be free throughout the territory of India, if there are barriers in any part of India, be it inter-State or intra-State. So long as there is impediment to that freedom, its nature or extent is irrelevant. The difference will be in degree and not in quality.”
16. The decision in Firm Mehtab & Co. v. State of Madras, was cited in support of the proposition that imposition of sales tax, which has the effect of discriminating between goods of one State and goods of another, offend Article 301. In that case the Supreme Court struck down rule 16(2) of the Madras General Sales Tax. (Turn, over and Assessment) Rules as it discriminated dealers of hides and skins tanned in Madras and these tanned outside that State on the ground that it hampered trade, commerce and intercourse. The effect of that Rule was that if a dealer has purchased raw hides or skins in that State, he does not pay on the sale price of the tanned hides or skins; he pays on the purchase price only. If the dealer purchases raw hides or skins from outside that State and tans them within the State, he will be liable to pay sales-tax on the sale price of the tanned hides or skins. At page 932 Raghubar Dayal, J., observed:—
“We do not consider that the mere circumstance of a tax having been paid on the sale of such hides and skins in their raw condition justifies their forming goods of a different kind from the tanned hides or skins which had been imported from outside. At the time of sale of those hides or skins in the tanned state, there was no difference between them as goods and the hides or skins tanned outside the State as goods. The similarity contemplated by Article 304 (a) is in the nature of the quality and kind of the goods and not with respect to whether they were subject of a tax already or not.
We are therefore of opinion that the provisions of rule 16(2) discriminate against of the imported hides or skins which had been purchased or tanned outside the State and that therefore they contravene the provisions of Article 304 (a) of the Constitution.”
17. The decision, in our view has no application because in that case the State discriminated between the same type of goods coming into the State, merely by reason of the goods being tanned outside the State as distinguished from those tanned inside the State. But in the present case the State has not discriminated in its legislation between the operators of Madras and Andhra Pradesh, by imposing different taxes. If at all the State which had the right to tax on all the bus operators from various States plying in the Andhra region is levying tax of Rs. 67-50 from its own operators while the inter-State operators from Madras are being taxed something less. Nor does the question whether the guarantee under Article 301 that trade, commerce and intercourse shall be free throughout India is applicable to a case where there is no restriction on the flow of that trade, commerce and intercourse by the imposition of regulrtory or compensatory taxes or even where reasonable restrictions are imposed after satisfying the conditions specified in the proviso to Article 304 (b). If the imposition of tax on the Madras operators is not unreasonable or if it is not a restriction on the flow of inter-State trade, commerce and intercourse, the question of it being not free throughout India within the meaning of Article 301 does not arise.
18. Mr. Srinivasamurthy conceded that imposition of a tax under the Motor Vehicles Act is compensatory and regulatory in character and does not come within Part XIII of the Constitution. Nonetheless he contends that for the purposes of the guarantee under Article 14 there is no reasonable classification. The way in which we look at this question as we have already, during the course of the arguments, put to the learned Advocates is to take the case of transport operators from 5 surrounding States of Andhra Pradesh, without any reciprocal agreements between the respective Governments. In a situation so envisaged not only the Andhra State operators plying their buses in the 5 neighbouring States of Maharashtra, Mysore, Madhya Pradesh, Orissa and Madras are liable to pay tax under their respective Motor Vehicles Taxation Acts, but the Andhra Pradesh State is also entitled to levy tax on the operators from those States under its own Act. It should not be forgotten that inter-State operators operate on particular routes and their permits are to be counter-signed for those routes. The countersigning of the permits has nothing to do with imposition of tax which is under a different Act altogether. And as we have seen, the tax imposed under these Acts has not been held to be a restriction on trade, commerce and intercourse; as such it is valid. This position could not be assailed by the learned Advocates. If this is so, and the imposition of tax is valid, and each of the States is entitled to levy tax under their respective Acts which is not ulara vires, then the exemption given by such of the States which have entered into reciprocal agreements not to levy tax or to levy a Specified amount of tax under each of their respective Acts cannot make the exemption invalid, merely by reason of the fact that other States have not entered into such reciprocal agreements. If all the States have entered into agreements except Madras, and both Andhra and Madras levy on the operators of each other according to their taxing laws, it cannot be said that this is a discrimination offending Article 14. There is in fact no discrimination at all because each State is imposing a tax which it can do under its own Act. Merely because this situation is brought about by withdrawal of the exemption to a certain extent under section 9 to impose on the Madras operators in the Andhra area a similar tax which is imposed in Madras State on the Andhra operators, it cannot be any different from the position envisaged by us. The classification between the operators of States governed by reciprocal agreements and those not so governed for the purposes of Article 14 is something different from treatment of transport operates as a class throughout the territory of India for the purposes of Article 301. In the case of freedom under Article 301 and restrictions under Article 302, transport operators are treated as a class throughout the whole of India and no State can restrict that freedom, while for the purpose of Article 14 classification is permitted lcrig as it his lesonable relation to the object or the purpose sought to be achieved by the impugned legislation. (Sri Budhan Chowdhry v. Stale of Bihar.) The very fact that different States impose different rates of taxes on motor vehicles operating from different States would, if the argument of the learned Advocates for the petitioners is accepted that motor transport operators are as a class, one throughout India, amount to a discrimination; but that it is not so, has already been noticed. In East India Sandal Oil Distilleries Ltd. v. State of Andhra Pradesh, Chandra Reddy, C.J, and one of us (the present Chief Justice were considering a case of persons carrying on business in jaggery who were exporting it to several States in the country and of dealers either in groundnut oil, rice or niger seeds. While submitting sales-tax returns, they claimed exemption in respect of a part of the turnover covering sales of inter. State character, on the plea that the tax had already been paid on the first sales. The exemption was disallowed on the ground that the tax was leviable as the sales were subject to tax under section 8 of the Central Sales Tax Act. It was contended that by reasons of section 8 while dealers in several kinds of goods in some of the States are exempt from sales-tax, dealers in the same commodities in this State are liable to pay tax on their inter-State sales, notwithstanding the fact that tax is leviable on these goods in this State only at a single point and in fact tax was collected in the State on the first sales. In this way, dealers of one State were given preference over those of another which it was said amounts to discrimination, not permissible under Article 14. The assessees of other States carrying on business in the same commodities enjoy an advantage over those of the State of Andhra Pradesh and this constitutes denial of the equal protection of lr.ws to assessees who are similarly situated. in this State. It may be stated that section 8 of the Central Sales Tax Act while granting exemption to merchants who are generally exempted from tax under the State Act or under provisions similar to that under other laws of other States, excluded partial exemption from the scope. The petitioners in that case complained that as a result of the impact of the impugned section, their business was adversely affected. It was argued that section 8 discriminates between one class of dealers and another class giving preference to the one over the other and therefore it offends Article 14. A State has to distribute the tax burden evenly and should not place merchants of one State in an advantageous position as against those of another State. Persons having common property and common characteristics should be meted out equal treatment. In dealing with these arguments, Chandra Reddy, C.J, observed at page 208:
“The section in controversy does not concern itself with the classification of goods for the purpose of granting exemption but merely recognises the total exemption that is granted by all the States and excludes from the operation of the section certain goods in specified circumstances or specified conditions. It puts every State in the same footing, leaving it to each of them to decide as to which of the goods should be completely exempted or not. So the discrimination, if any is not traceable to section 8 but to the difference existing in the laws of the different States. In this premises, it is difficult to postulate that section 8 suffers from the vice of discrimination and that Article 14 has been violated.”
19. After examining the several decisions cited before the Bench, the learned Chief Justxe summed up the position at page 209 thus:
“What emerges from these authorities is that a law cannot be struck down as infringing Article 14 of the Constitution on the ground that a combined operation of the law impeached and other laws made by other legislatures will result in hostile discrimination against some individuals. In order to attract Article 14 such a consequence should flow from the operation of the challenged statute. As already remarked, no such effect could be attributed to the impugned section.
…………………………………………………………………………………………………….
But the position is also indisputable that while Article 14 forbids class legislation, it does not prohibit a classification based on intelligible differentia with a nexus between the basis of the classification and the object of the legislation. There can be little doubt that the two tests are satisfied in the instant case. The grouping of dealers generally exempt from tax and dealers exempted under certain conditions and under certain circumstances into separate categories is Statewise and as such it is a territorial classifications. It is also based on a reasonable differentia. It has a reasonable relation to the avoved object of the impugned legislation which is to levy and collect taxes for the benefit of the States and in that process acting as their agent.”
20. In this view, the contention relating to discrimination under Article 14 was rejected. In the case before us also the object of the classification is reasonable, in that the Andhra State intends to put the Andhra operators on the same footing and give them the same advantages as the Madras operators would have when they operate in the Andhra area. If the Madras operators were totally exempt from any tax being levied while the Andhra operators are taxed in the Madras State, the Madras operators would be in a position to drive the Andhra operators out of their business, in so far as, that part of the route is concerned in which they operate in the Andhra area, and as a consequence, the State would incur loss of revenue from its own operators which it would otherwise have got. In order to avoid this unequal competition, the State exercised its powers of regulating the operation, which cannot be said to be arbitrary or unreasonable. As the learned Advocate-General rightly contended, what appears to be an apparent discrimination far from discriminating is really designed to equalise the advantages and disadvantages. In this view, we reject the contention of the learned Advocates for the petitioners.
21. We will now deal with the appeals filed by the State challenging the correctness of the decision of Gopalakrishnan Nair, J., declaring the notification giving exemption retrospectively from 1st April, 1963 to 29th June, 1964 to be invalid.
22. The learned Advocate-General contends that a rule or notification made in exercise of the powers conferred by a statute when made, has the force of law and is as if enacted by the Legislature as a part of the statute. On this premise he contends that the power conferred by Legislature on the subordinate or delegated authorities to make a rule or notification to carry out the purposes of the Act, can be exercised to give retrospective operation to the rule or notification, just in the same way as a Legislature could in exercise of its sovereign legislative power enact a legislation retrospectively. He contends that if there is no express prohibition, the executive will have power to issue a retrospective ‘notification. An exemption, he submits, c?.n be granted retrospectively and where it is granted, it could be cancelled retrospectively. It is his case that where an exemption is cancelled by a notification, the cancellation is deemed to take offect as if it is not in existence from the date on which it was granted, that is as if the exemption was never granted from that date, and on that basis the State could collect the exempted tax retrospectively. For these propositions, he relied on Subramania Iyer v. Travancore-Cochin State, Guruviah Naidu v. Stale of Madras, P. Basavayya & Sons v. State of Andhra Pradesh, Kailash Naih v. State of U.P, Epari Chima Krishna Moorthy v. Slate of Orissa, Ujjam Bai v. State of U.P, Ram Azhar v. State of U.P . A.I.R 1962 All. 328 F.B., Indramani v. W.R Natu . 1963 2 S.C.J 59; A.I.R 1963 S.C 274, 286., Bishun Narain v. State of U.P . 1965 2 S.C.J 718; A.I.R 1965 S.C 1567., B.N Nagarajan v. State of Mysore . 1967 2 S.C.J 664; A.I.R 1966 S.C 1042., and Hampion Jr. Co. v. United States . 72 Lawyers's Edn. 624, 630..
23. Sri Narasaraju, who appears in Writ Petition No. 1148 of 1965, in which the question of retroactivity is one of the points—though, we are not deciding that writ by this judgment—wanted to make submissions on this aspect of the matter; inasmuch as it is likely to affect his case also when it comes up for decision. He was accordingly heard. The learned Advocate controverts the contentions of the learned Advocate-General. It is his centention that under the scheme of separation of powers, the power to make a law is vested in the Legislature alone. The executive has no power to make a law, as such, the grant of a power to the executive by the Legislature to make a rule or notification is governed by the terms of the delegation. It cannot therefore, be said that when the Legislature delegates its power, it abdicates its power, which includes the power to enact a retroactive law, which is an incident of a sovereign Legislature. It is, therefore, contended that because the executive derives the power to make a rule or notification from the Legislature, the extent of the delegation is the deciding factor; it determines the scope and ambit of that power. In the circumstances, the power conferred by a Legislature on an executive authority, does not by itself imply that the executive authority has power to exercise it retrospectively, unless that power is specifically conferred.
24. Mr. Srinivasamurthy distinguishes the several cases cited by the learned Advocate-General, and contended that they do not support the contention either that the Legislature when it delegates a power on the executive to give effect to the provisions of the Act, confers on it the power to act retroactively; nor do they support the proposition that unless the Legislature restricts the power it should be cle:mel to have conferred retroactive power on the executive authority.
25. In Subramania Iyer v. Travancore-Cochin State, what was considered was not the retrospective character of the exemption or the exercise of the power granted by the Legislature on the executive retroactively, but whether the cancellation of the exemption was vllrc vires the power of the Government, inasmuch as it had the effect of imposing tax on the dealer, though under Article 265 of the Constitution, no tax could be imposed except under an express authority conferred by statute. This contention was repelled, on the ground that the said notification had merely removed the ban that had been placed on the levy of the tax which the statute had already imposed under section 3 (1) of the Travancore-Cochin General Sales Tax Act. At page 829, Sankaran, J., said:
“The effect of the first notification dated 5th February, 1951, granting exemption from the payment of such tax was only to suspend the levy of such tax so Jong as the notification granting the exemption remained in force. The suspension of the levy of the tax came to an end as soon as the notification granting the exemption was cancelled by another proper and valid notification………………………
26. There is therefore no force or substance in the contention urged on behalf of the appellant-petitioner that the second notification issued by Government in 18th July, 1951, is ultra vires the powers of Government under section 6 (r) of the Sales Tax Act.”.
27. The learned Advocate-General relies upon a decision of a Bench of this Court in P. Basavayya & Sons v. State of Andhra Pradesh, in support of his proposition. In that case, the retrospective operation of rule 4 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, which was made under the provisions of sub-sections (4) and (5) of section 3, and section 19 of the Madras General Sales Tax Act, which was introduced by G.O Ms. 220 Finance (Commercial Taxes) dated 21 st March, 1956 but which was given effect of to from the 1st of November, 1955 was called in question. Sub-section (4) of section 3 and clause 5 of section 19 are in the following terms:—
Section 3 (4).—“For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed:
Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly ‘‘.
Section 19(5).—“All rules made under this section shall be published in the Fort St. George Gazette and upon such publication shall have effect as if enacted in this Act.”
28. Rule 4-A, it was observed was framed under the power conferred by clause 2 (a) of section 19 which, according to the State Government was made in exercise of the power to make rules with respect to “all matters expressly required or allowed by this Act to be prescribed.” It may be observed that the Bench drew support from a decision of the Madras High Court in Guruviak Naidu v. Stale of Madras, where the validity of the amendment to rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules introduced by G.O.Ms No. 2733 Revenue, dared 3rd September, 1955 and which was made retrospective to have effect as and from 1st April, 1955 was challenged. What Rajagopala Ayyangar, J., was considering in that case was whether the words “prescribed by rules made under this Act” as defined in section 2 (f) justify an interpretation that the power to make rules was conferred by section 19 of the Act. It was held in that case that the use of the word “prescribed does not impose a restriction on the rule making authority and does not confine its power to make a rule to operate only for the future.” While this may be so, a persual of the judgment in Guruviah Naidu's case, would show that after the notification was issued, there was an ordinance issued by the Govemer of Madras published on 22nd March, 1957 by section 7 of which is validated certain assessments and levy of licence fees for the year 1955-56, notwithstanding the retrospective operation of the amendments to the Madras General Sales Tax Rules, 1939 and the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. This ordinance was replaced by Madras Act I of 1957. The attack in that case was confined to the invalidity of the rule in so far as it imposes a tax liability before 3rd September, 1955; in other words only to the period for which the rule was made retrospective by specific provision therefor. The learned Judge based the decision in that case on the Validation Act. At page 151 he observed;
“In these circumstances I hold that the objection raised by the learned counsel even if it has any force has to be repelled after the enactment of section 9. of the Madras Act I of 1957.”
29. In P. Basvaayy's case, there was no discussion as to the principles upon which the conclusion that retrospective effect would be given to section 4-A was based. It is rightly contended by both the learned Advocates, Sri Narasaraju and Sri Srinivasa Murty that the proviso to section 3 (4) imposes a restriction on the power to make rules under section 3 (4) which is mandatory. That condition imposes a fetter upon the executive authority that any rules made can only come into force if approved by a resolution of the Assembly, so much so, that the Act itself envisages the Legislature's positive concurrence to the rules made thereunder. The delegatee is not empowered to give effect to those rules unless the principal, namely the Legislature, assents to it. The assent by the Legislature to these rules is tantamount to the enactment of these rules by the Legislature itself which has sovereign power to give effect retrospectively. This case canno, therefore, be relied on as laying down the proposition that when a Legislature confers power to make a rule or notification it has by the very use of the words “as if enacted in the Act” delegated one of its sovereign legislative functions, namely, to enact a statute, with retrospective effect.
30. No doubt, as the learned Advocate-General contends, it makes no difference whether the words “as if enacted in the Act,” are there or not, because when rules are made or notifications issued, they having been issued in exercise of the powers conferred by the Legislature, must be deemed to be part of the statute. In support of this contention, he cited two decisions of the Supreme Court in Kailash Nath v. State of U.P and State of Kerala v. K.M.C Abdulla & Co., both of which are cases in which it was observed that whether the clause referred to is in the statute or not, it makes no difference because any instrument made in exercise of the powers is nonetheless part of the statute. These decisions however, do not help us to resolve the main question as to the scope and ambit of the delegated power.
31. In Epari Chinna Krishna Moorthy v. State of Orissa, is a case where the Supreme Court was considering the scope of section 2 of the Orissa Sales Tax Validation Act, 1961, and it was clearly a case where the retrospective nature of the legislation was concerned and not of any notification or rule. It may be noticed that in exercise of the powers under section 6 of the Orissa Sales Tax Act, 1947 the Government of Orissa issued a notification exempting from sales tax gold ornaments “when the manufacturer selling them charges separately for the value of gold and the cost of manufacture.” The petitioner in that case was carrying on business in gold and silver ornaments, supplied gold to artisans, got the ornaments prepared by the artisans under his supervision and sold the ornaments in his shop showing the value of gold and cost of manufacmre separately. The High Court held that the petitioner was a manufacture” of gold ornaments and was therefore entitled to the benefit of the exemption under the notifica ion. Subsequently, the Orissa Legislature passed the Orissa Sales Tax Validation Act, 1961, section 2 of which provided that notwithstanding anything contained in any judgment, decree or order of any Court the word manufacturer occurring………………in the Notification,………………shall mean and shall always be deemed to have meant a person who by his own labour works up materials into suitable forms and a peson who owns or runs a manufactory for the purpose of business with respect of the articles manufactured therein the petitioner challenged the validity of this section, on the grounds that since the exemption was granted by the State Government by virtue of the powers conferred on it by section 6 of the Orissa Sales Tax Act, 1947, it was not open to the Legislature to take away that exemption retrospectively, and that the section contravened the provisions of Articles 14 and 19(1)(g) of the Constitution. It is clear, therefore from the first objection that what was challenged was not the power conferred on the executive authority to exercise the power to give retrospective effect, but the validity of the statute passed by the Legislature giving retrospective operation, about which competence there can be no doubt. What was argued was that the power to grant exemption having been conferred by the State Government, it was-validly exercised by the State Government, and though the Legislature may withdraw such exemption, it cannot do so retrospectively. Dealing with this contention,. Gajendragadkar, C.J, observed at page 465:—
“We are not impressed by this argument. What the Legislature has purported to do by section 2 of the impugned Act is to make the intention of the notification clear. Section 2 in substance declares that the intention of the delegate in issuing the notification granting exemption was to confine the benefit of the said exemption only to persons who actually produce gold ornaments or employ artisans for that purpose. We do not see how any question of legislative competence can come in the present discussion. And if the State Government was given the power either to grant or withdraw the exemption, that cannot possibly affect the Legislature's competence to make any provision in that behalf either prospectively or retrospectively. Therefore, there is no substance, in the argument that the retro-specive operation of section 2 of the impugned Act is invalid.”
32. The learned Advocate-General also cited a Full Bench decision of the Gujarat High Court in Ranchhod Zina v. Patanikar, but we do not find that any assistance can be derived from that decision. What was being considered in that case was whether a power once exercised could be again exercised by rescinding the previous order and issuing a fresh order. In that connection it was stated that the power was not so limited as to be exercised only once. An earlier judgment of the Gujarat High Court in Lavjibhai Naranbhai v. Ramjibhai Hetabhai, has held otherwise, it is for that reason that the Full Bench was constituted to overrule that decision. It appears to us that while a Legislature, unless it is prohibited by the Constitution, in exercise of its sovereignty, has the power to legislate retrospectively, any power delegated by such Legislature to an executive authority cannot, unless the power to exercise it retrospectively, is either expressly or by necessary implication, granted to it, exercise it retrospectively. The extent of the powers of the Legislature and of the delegate of authority are not co-extensive or similar. In construing the rules made or notifications issued in exercise of the powers vested in the executive authority, the ordinary rule of construction is that effect must be given to them from the date of their promulgation. The executive authority has no power to give effect to them retrospectively, unless the terms of the grant of the power by the Legislature empower the delegate to exercise it retrospectively. It was held in India Sugars and Refineries Ltd. v. State, by a Bench of the Mysore High Court that unless the power to legislate conferred on any executive body by the Legislature, expressly mentions that such power can be exercised retrospectively, it can only be exercised prospectively. Accordingly a power conferred by a Legislature on a subsidiary body, e.g, Government, to issue notifications, if couched in general language, can unless it is expressly stated that the same can be exercised retrospectively, only be exercised prospectively. It was further held that a legislative body unlike the executive body can always legislate retrospectively unless there is any prohibition under the constitution which has created it. Das Gupta, C.J, said at page 330:
“The extent of the power of a Legislature and those of an executive Government exercising delegated legislative power, in this respect are not the same.”
33. He relied on a decision in Modi Food Products Ltd. v. Commissioner of Sales Tax, U.P, as also on the ratio of the decision in Strawboard Manufacturing Co., Ltd. v. Gutta Mills Workers Union. In the latter case an award was given 8 days after the expiry of the time originally fixed for the making of the award. 13 days after the delivery of the award, the notification in question was issued, whereby the Governor allowed the adjudicator to submit his award by 30th April, 1950. The question which fell for determination before the Supreme Court was whether or not the award was null and void, and in deciding that question, the other question which arose was whether or not the Governor could issue a notification giving retrospective effect. It was contended before their Lordships that the Governor could, having regard to the provisions of section 21 of the U.P General Clauses Act, 1904. The Supreme Court negativing the contention, held that
“In view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation, the order of 26th April, 1950, viewed merely as an order of amendment or modification, cannot by virtue of section 21, have that effect.”
34. On the terms of the provision of the Mysore Act the Mysore High Court held that the intention of the Legislature in enacting section 14 was not to confer a power on the Government to levy an assessment retrospectively, but only prospectively. This decision was followed in Govindaraju v. State of Mysore, and Govindappa v. I.G Registration.
35. We will presently refer to the two decisions of the Supreme Court which refer to the decisions of the Mysore High Court in India Sugars and Refineries Ltd. v. State, but before we do so, it is necessary to state the principles governing the delegation of power. Their Lordships of the Supreme Court had occasion to consider this matter in In re Delhi Laws Act (1912), where the validity of the delegation conferred by the Central Legislature which empowers the executive authority under its control to apply at its discretion the laws to an area which was also under the legislative way of the Centre. We could do no better than to adopt, as was done by Subba Rao, J., (as he then was) in Vasanlal Maganbhai v. State of Bombay, the summation of the majority view by Bose, J., in Rajnarain Singh v. Chairman, Patna Administration Committee, Patna, of the seven variations of the authority given to the executive in the Delhi Laws Act case He observed at page 574:
“In our opinion, the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature. Exactly what constitutes an essential feature cannot be enunciated in general terms, and there was some divergence of view about this in the former case, but this much is clear from the opinions set out above; it cannot include a change of policy.”
36. The majority in Vasanlal Maganbhai's case, held that Legislature cannot delegate its essential legislative function in any case, and that it must lay down the legislative policy and principle and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. Subba Rao, J., (as he then was) dissenting observed at page 11:
“But there is a danger inherent in such a process of delegation. An overburdened Legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the Legislature exceeded such limits. But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power on executive authorities. It is the duty of this Court to strike down without any hesitation any blanket power conferred on the executive by the Legislature.”
37. The majority in that case, having regard to the legislative policy laid down in the preamble to the Act and the other relevant sections and having regard to the guidance which has been provided for fixing a reasonable rent under section 12(3) held that the power delegated to the Provincial Government by section 6 (2) does not suffer from infirmity of excessive delegation. Subba Rao, J., (as he then was) on the other hand came to the conclusion that there was no indication of the legislative policy in the manner of fixation of the lower rate of maximum rent in the preamble or in section 6 (1) of the Bombay Tenancy and Agricultural Lands Act, and that while section 6 (i) overrides other provisions of the Act, section 6 (2) derr gates from section 6(1) itself and is therefore void as it exceeds the permissible limits of delegated legislation.
Again in Indramani v. W.R Natu, the majority of the Supreme Court, Subba Rao, J., dissenting, observed on the question of whether it is legally competent to vest a particular power in a statutory body, that the proper rule of interpretation would be that unless the nature of the power is such as to the incompatible with the purpose of which the body is created, or unless the particular power is contraindicated by any specific provisions of the enactment bringing the body into existence, any power which would further the provisions of the Act could be legally conferred on it. The majority further observed that a power conferred by a bye-law is not one conferred by the Act, for in the context the expresssion “conferred by the Act” would mean “conferred expressly or by necessary implication by the Act itself”. Rajagopal Ayyangar, J., referred to the argument based on the decision of the Mysore High Court in India Sugar and Refineries Ltd. v. State of Mysore, that though a Legislature which had plenary power in regard to enactment of a law giving retrospective effect, could enact a statute having a retrospective operation, subordinate legislation, be it a rule, a bye-law or a notification could not be made so as to have retrospective operation and that to that extent the rule, bye-law or notification would be ultra vires and would have to be struck down. He observed at page 286 and 287:
“We do not however consider it necessary to canvass the correctness of this decision or the broad propositions laid down in it. It is clear law that a statute which could validly enact a law with retrospective effect could in express terms validly confer upon a rule-making authority a power to make a rule or frame a bye-law having retrospective operation and we would add that we did not understand Mr. Pathak to dispute this position. If this were so the same result would follow where the power to enact a rule or a bye-law with “retrospective effect” so as to affect pending transactions, is conferred not by express words but where the necessary intendment of the Act confers such a power. If in the present case the power to make a bye-law so as to operate on contracts subsisting on the day the same was framed, would follow as a necessary implication from the terms of section 11, it would not be necessary to discuss the larger question as to whether and the circumstances in which subordinate legislation with retrospective effect could be validly made.”
38. Subba Rao, J., (as he then was) entirely concurred with the observations of Das Gupta, C.J, in the Mysore case as well as those expressed by the Kerala High Court in C.W Motor Services P. Ltd. v. State of Kerala. After referring to a passage in the judgment of the House of Lords in Howell v. Falmouth Boat Construction Co., Ltd., the learned Judge gave expression to his view at page 292 thus:—
“Our Constitution promises to usher in a welfare State. It involves conferment of powers of subordinate legislation on Government and Governmental agencies affecting every aspect of human activity. The regulatory process is fast becoming an ubiquitous element in our life. In a welfare State, perhaps, it is inevitable, for the simple reason that Parliament or Legislature cannot be cxpected to provide for all possible contingencies. But there is no effective machinery to control the rule-making powers, or to prevent its diversion through authoritarian channels. If the conferment of power to make delegated legislation proprio vigore carried with it to make a rule or bye-law with retrospective operation, it may become an instrument of oppression. In these circumstances, it: has been rightly held that the provision conferring such a power must be strictly construed and unless a statute expressly confers a power to make a rule or bye law retrospectively, it must be held that it has not conferred any such power.
It is said that such a strict construction may prevent a rule-making authority from making a rule in an emergency, though the occasion demands or justifies a rule with retrospective effect. The simple answer to this alleged difficulty is that if the Legislature contemplates or visualises such emergencies, calling for the making of such rules or bye laws with retrospective effect it should expressly confer such power……………the scope or ambit of a rule cannot be made to depend upon the status of a functionary entrusted with a rule-making power. In public interest the least the Court can do is to construe the provisions conferring such a power strictly and to confine its scope to that clearly expressed therein.”
39. Again at the same page he observed:
“Assuming that it is permissible to infer such a power by necessary implication can it be said that it is possible to so imply under section 12 of the Act? The phrase “necessary implication” as applied in the law of statutory construction, means an implication that is absolutely necessary and unavoidable; that is to say, a Court must come to the conclusion that unless such an implication is. made the provisions of the section could not be given full effect on the wording as expressed therein.”
40. This decision is an authority for the proposition, at any rate in so far as the majority is concerned, that it is necessary to examine the provisions of the statute to ascertain the nature of the power conferred on the executive authority. The policy of the Act, the intendment, the implication, could all be taken into consideration in determining whether retrospective powers has been conferred. It will be observed that this case does not support the proposition of the learned Advocate-General that unless the exercise of the power of retroactivity is prohibited, it must be assumed that the legislature conferred that power on the executive authority. Nor does it support the proposition that where a rule or bye-law is made, it has the effect as if enacted in the Act and could be given retrospective effect. Shah, J., delivering the judgment of the majority in State of Kerala v. Abdulla & Co. (Subba Rao, J., (as he then was, dissenting), repelled this contention. At page 1589 he observed:
“The alternative ground advanced by the Advocate-General may be easily disposed of. The rules made under section 19 and published in the Government Gazette have by the express provision to have effect as if enacted in the Act; but thereby no additional sanctity attaches to the rules. Power to frame rules is conferred by the Act upon the State Government and that power may be exercised within the strict limits of the authority conferred. If in making a rule, the State transcends its authority, the rule will be invalid, for statutory rules made in exercise of delegated authority are valid and binding only if made within the limits of authority conferred. Validity of a rule whether it is declared to have effect as if enacted in the Act or otherwise is always open to challenge on the ground that it is unauthorised.”.
41. We may here notice one other decision of the Supreme Court in which the question decided by the Mysore High Court was left open In B.N Nagarajan v. State of Mysore, it was sought to be contended that under an Act of parliament or an Act of a State Legislature the executive cannot frame rules retrospectively unless the Act specifically empowers it to do so and that the position is the same under the proviso to Article 309, of the Constitution. Sikri, J., observed at page 1948.
“In our opinion, it is not necessary to decide this point in these cases because we are of the view that the appeal can be disposed of an another ground.”
42. It appears to us that the preponderance of the view is that unless a power to give effect retrospectively is conferred for making a rule or issuing a notification, it is not permissible to the delegate to exercise that power retrospectively. Their Lordships of the Supreme Court also have quite categorically, as has been seen, stated that the power must be exercised within the ambit of the delegation. In our view, if the power to act retrospectively is not delegated, whether you come to this conclusion on a consideration of the policy, intendment or implication of the legislation under which the power is conferred or by adopting a rule that unless there is express delegation, retrospective effect cannot be given. There is no warrant for the broad proposition that every delegation carries with it the power to exercise it retrospectively. Now is there any validity in the contention that a con-cellation of the exemption would imply that it is cancelled from the date it was given, namely, retrospectively. Our considered view is that there is no indication in the provisions of the Motor Vehicles Act, either expressly or by implication or necessary intendment, or in the power conferred upon the executive, for the exercise of that power retrospectively. On the other hand, there is a contrary indication as pointed but by Sri Kannabhiran, that the tax for the quarter has to be paid in advanced under sections 4 and 6 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 m the manner specified in section 11 by the legistered owner of the motor vehicles or any other person having possession or control thereof, at his. choice, either quarterly, half yearly or annually on a licence to be taken out by him for that quarter, half-year or year, within fifteen days from the commencement of the quarter, half-year or year, as the case may be; and if this is not done, he is liable to penalty under section 6. In these circumstances it could not be the intention of the Legislature to confer a power of withdrawal of exemption retrospectively upon the executive, which not only makes it impossible for the owner of the motor vehicle to pay tax retrospectively within 15 days from the date of the beginning of the quarter which has already gone past, but also makes him liable for penalties for something which it is impossible for him to do. In this view, the judgment of Gopalakrishnan Nair, J., requires no interference and must be confirmed.
43. The result is that both the petitioner's appeals as well as the appeals preferred by the Government are dismissed with costs. Advocate's fee Rs. 50 in each.
44. All 1he appeals dismissed.