Khosla, J.:— The petitioners, three in number, have moved this Court for a writ or appropriate order under Article 226 of the Constitution. The object of the petition is to challenge the validity of the Punjab Passengers and Goods Taxation Act (Act No. XVI of 1952) and also of the Amending Act (Punjab Act No. XXI) of 1952 and of the rules framed under these Acts.

2. Petitioners Nos. 1 and 3 are private limited companies carrying on the business of transport of goods by road. They have their headquarters at Delhi but their vehicles ply on roads and routes in the State of Punjab. Petitioner No. 2 is the Delhi Provincial Motor Transport Union which is an organization of the owners of the transport vehicles and representatives of transport companies at Delhi. The owners and representatives have formed themselves into a Union for safeguarding their interests.

3. The impugned Act came into force on the 1st of August 1952. Its object was to impose a tax on all fares and freights in respect of passengers carried and goods transported by motor vehicles in the Punjab State. The scheme of the Act is that a tax is to be levied on all fares and freights at the rate of one pie per anna value of the fare or freight. It is further provided that where no freight or fare is charged the tax is to be calculated as if the freight or fare had in fact been charged at the normal rate prevalent on the route in question. One somewhat unusual provision is that the Government may accept a lump sum in lieu of tax and may grant an exemption from the payment of tax in some cases. Owners of motor vehicles are required to maintain accounts and to show them to the prescribed authority appointed under the Act for this purpose. All vehicles which run on roads in the Punjab State are to be registered and a registration certificate must be obtained by their owners. There are provisions providing for a penalty in case of breach of any of the provisions of the Act. The vehicles of petitioners Nos. 1 and 3 ply on roads lying partly within the State of Punjab and partly in other States, e.g Delhi and PEPSU. They failed to register their vehicles according to the terms of sections 8 and 9 and they were served with a notice calling upon them to attend the office of the Excise and Taxation Officer, Jullundur. On receipt of this notice the petitioners moved this Court by this petition.

4. The validity of the Act is challenged on no less than fourteen grounds which are set out in the concluding portion of the petition. Many of the grounds, however, are merely different modes of expressing the same thing and there are in the main six grounds. I shall deal with them in the order in which they are set out in the petition and not in the order in which they were argued before us by Mr. Chatterjee.

5. Grounds Nos. 1 to 5 may be taken together. The validity of the Act has been challenged on the ground that the Act is not within the legislative competence of the Punjab State in as much as (a) it is a tax on income which is Item 82 of List I to the Seventh Schedule of the Constitution (b) it is not a matter dealing with trade or commerce within the State as contemplated by Item 26 of List II, and (c) it is covered by Item 42 of List I which is inter-State trade and commerce.

6. A reading of section 3 of the Act makes it quite clear that the tax in question is not a tax on income but is a tax on the passengers carried and the goods transported by motor vehicles. The relevant portion of section 3 reads as follows—

“(1) There shall be levied, charged and paid to the State Government a tax on all fares and freights in respect of all passengers carried and goods transported by motor vehicles at the rate of one pie per anna value of the fare or freight, as the case may be subject to a minimum of three pies in any one case; the amount of tax being calculated to the nearest whole pice (three pies).

Explanation.— When passengers are carried and goods are transported by a motor vehicle, and no fare or freight has been charged the tax shall be levied and paid as if such passengers were carried or goods transported at the normal rate prevalent on the route.

7. The tax is thus a tax on fares and freights and not on the income which the transport company makes from their business. The tax is to be levied even when the owner of the vehicle does not charge any freight or fare from his customer. A tax on income is a tax on net income or profit made by a businessman. In the present case the tax levied by the Act may bear no relation whatsoever to the net income derived from the business. It is true that the Act does not make a provision for levying the tax from the passenger who travels in a motor vehicle or from the passenger who sends goods by it but there is no prohibition to the contrary and the owner of a motor vehicle can collect the tax by treating it as a surcharge on the fare and the freight. Thus it is the passenger or the owner of the goods which pays the tax and the vehicle-owner merely collects it. Nor can it be said that the matter dealt with by the Act is inter-State in trade or commerce. Item 56 of List II is “Taxes on goods and passengers carried by road or on inland waterways” and this Item clearly covers the subject-matter of the Act and therefore it is neither Item 42 nor Item 82 of List I. Nor does the Act fall under Item 26 of List II. It falls clearly under Item 56 of List II which is a matter within the legislative competence of the State Legislature.

8. The fact that vehicles have to travel from one State to another makes no difference to the case. The tax is not restricted to those vehicles which enter the Punjab State or go out of the Punjab State. It is imposed in respect of all vehicles which travel on roads in the Punjab State, whether the entire journey lies in the Punjab State or a part of it lies in the Punjab State and a part in another State. The tax is to be calculated in proportion to the length of the route which lies within the Punjab State unless the journey both begins and ends in the State.

9. This matter was considered by a Full Bench of the Patna High Court in Atma Ram Budhia v. State of Bihar . A.I.R 1952 Pat. 359.. In that case the validity of the Bihar Finance Act was challenged. Part III of the Act provided for the levy of a tax on fares and freights of a nature very similar to the tax under consideration. Section 12 of the Bihar Act provided that a tax would be levied “on all passengers and on all goods transported.” Section 12 of that Act was very similar in terms to section 3 of the impugned Act. The argument raised before the learned Judges of the Patna High Court was very similar to the argument raised before us. Indeed, the entire course of arguments addressed before us by both parties followed (with one important exception) the line of the arguments addressed before the Patna High Court. In that case, too, it was argued that the tax was a tax on income and was therefore not within the legislative competence of the Bihar Legislature. Sarjoo Prosad, J., who delivered the judgment of the Full Bench, observed (page 364 of the Report)—

“Here the charging section is section 12, and sub-section (1) of the section quite clearly provides that the tax is upon the passengers and goods and not upon the income of the owners and the fares and freights realisable by them. The fares and freights have been used merely as a standard for calculating the tax, and there is nothing irrational in doing so. This measure of the tax cannot convert it into a tax on the income of the owners themselves. * * * * Therefore, the fact that the tax is to be measured in proportion to the fares and freights realised does not alter the nature of the tax or effects its ‘intrinsic character’ which is actually a tax upon the goods and passengers carried on the motor vehicle. The standard of measurement adopted is not an unreasonable standard regard being had to the primary purpose of the Act which is to obtain revenue for the State; and the constitutional right to adopt the standard of measurement is derived from the constitutional authority of the legislature which authorises the tax to regulate the matter in question.”

10. And again—

“Here the obligation of the tax is placed on passengers and on all goods carried by motor vehicles. There is also an obligation upon the ‘owners’ to pay the tax so realised to the State Government. Therefore, although the statute does not expressly authorise the owners to collect the tax from the passengers and consignors of goods, yet the statute must be construed to have implicitly granted the power and the right to the ‘owners’ to collect the tax in order to make the statute effective.”

11. The answer to the argument raised before us on behalf of the petitioners could not have been more effectively worded.

12. Learned counsel relied upon an American case Gloucester Ferry Company v. Commonwealth of Pennsylvania . 114 United States 196.. In this case an Act of the State of Pennsylvania imposing a tax on the transport company was declared invalid on the ground that it had the effect of interfering with free inter state commerce, but the tax in that case was imposed not on goods or passengers carried out upon the company itself. The company had to pay the tax on the dividend declared or on the valuation of the capital stock. The tax was not to be levied from the passengers or customers of the Ferry company and the measure of the tax was not the mileage or distance travelled but the profits made or the dividend paid by the company or the valuation of its capital stock. No assistance can therefore be derived from that case and the Punjab Act does not seek to tax owners of motor vehicles on the basis of the profits made by them or the valuation of their stock. Grounds Nos. 1 to 5 therefore are wholly untenable and the Act cannot be said to be ultra vires on the ground of lack of legislative competence.

13. Another ground urged was that the Act is ultra vires because it contravenes the provisions of Article 23 of the Constitution in as much as it imposes obligations upon the owners of motor vehicles in the matter of keeping statements and accounts of the journeys performed and the freights and passengers carried. This argument was also raised before the Patna High Court and was dealt with by a Full Bench. There is, however, no force in this argument and I am not at all also sure if Mr. Chatterjee was serious in urging it before us.

14. The argument has only to be examined to be rejected. There is nothing savoring of begar or forced labour in requiring the owners of motor vehicles to keep accounts and statements under the Act. These accounts must be kept for their own benefit and the Taxation Officer is entitled to examine them with a view to determine the amount of tax recoverable from vehicle-owners. Sarjoo Prosad, J. while dealing with this matter in Alma Bam Budhia v. State of Bihar, observed—

“Now, Article 23(2) of the Constitution clearly makes an exception in favour of the State and enables the State to impose compulsory service for public purposes provided such an imposition is not vitiated on grounds of discrimination. No discrimination has been suggested here. The Legislature, therefore, is entitled to impose burdens on citizens in the interest of the public. This is particularly so, in the case of a taxing statute where the Legislature has to levy taxes for the purposes of the State revenue and has to collect these taxes through the most convenient and efficient channels. In doing so, the State would be justified in imposing obligations upon the citizens concerned to assist in the collection of those taxes. The levying of a tax, that is to say, the determination that a given tax shall be imposed, assessed and collected in a certain manner is a legislative function provided it is exercised within the permissible bounds of legislation as given in the Constitution. Therefore, the Legislature having the power to authorise the tax, it must a fortiori possess also the power ‘to prescribe the means by which the tax shall be collected, and to designate the officers through whom its will shall be enforced’.”

15. It will not be denied that there is nothing onerous or unjust in Government requiring owners of motor vehicles to maintain accounts of the nature contemplated with a view to determine the amount of tax recoverable.

16. The next ground raised in the petition was that the Act was had because it contravened the provisions of Article 39(1)(g) of the Constitution in that it amounted to a restriction on the right to trade freely and the right to carry on a trade or business. The imposition of a tax of this nature cannot be said to be a restriction on the carrying on of a trade. Nobody is being prevented directly from plying his vehicles on the roads in the Punjab State. Nor are any restrictions being placed upon him. The imposition of a tax is not a direct restraint upon trade. Mr. Chatterjee relied upon the Privy Council decision in Commonwealth of Australia v. Bank of New South Wales . 1950 A.C 235.. In this case the validity of section 46 of the Banking Act, 1947 was challenged. Under this section private banks were prohibited from carrying on banking business in Australia except under certain conditions. Their Lordships of the Privy Council took the view that this amounted to restraint upon trade because it was a direct prohibition. Their Lordships laid down two tests for determining whether a certain enactment interfered with the freedom of trade or not—“first, whether the effect of the Act is in a particular respect direct or remote; and secondly, whether in its true character it is regulatory.” In the present case there is no direct interference with free trade. The imposition of a small tax cannot possibly prohibit or have the effect of prohibiting even indirectly in the running of motor vehicles in the State of Punjab.

17. Reliance was also placed on The State of Bombay v. The United Motors (India) Ltd. . A.I.R 1953 S.C 252.. The only point that was decided by the Supreme Court in that case was that the Bombay Legislature could not impose a tax on sales and purchases in contravention of Article 286 of the Constitution. The imposition of sales tax on sales and purchases effected in the State of Bombay was held valid but the State was restrained from ‘imposing or authorising the imposition of a tax on sales and purchases which are exempted from taxation by Article 286’. I would hold therefore that in this case the Act does not contravene Article 19(1)(g) of the Constitution.

18. Another point urged was that the Act contravened Article 14 of the Constitution or what has been called the equality clause. It was urged that there was discrimination because (a) the persons using motor vehicles were being discriminated as against the persons using the railways or other means of transport; (b) there was discrimination under section 10 of the Act because certain persons could be exempted from the payment of tax; and (c) the Government could accept a lump sum under section 4 of the Act (as amended).

19. I find no force in this argument. The railway fares are liable to be increased or decreased as the occasions and other circumstances demand. Railway fares depend on a number of factors such as the cost of running railways and the strategic or economic importance of certain lines. The State is entitled to meet the cost of maintaining railways and the entire revenue from railways goes to the State. Motor roads are maintained by the States or the Central Government and they are entitled to recover the cost of maintaining these roads from the taxes imposed upon persons who use these roads. There are two or three kinds of taxes which motorists have to pay but it cannot be said that this is an inequity merely because pedestrians using the same roads are not liable to pay these taxes. In the same way if a tax is imposed upon passengers travelling by public carriers it cannot be said that this amounts to unjust discrimination if the classification is reasonable and is in the interest of the public. The fact that only users of motor vehicles are called upon to pay this tax does not mean that the Act contravenes the provisions of Article 14. It may perhaps be argued that the exemption clause contained in section 10 gives too wide and too arbitrary power to the State Government, but this section is severable from the rest of the Act and even if this section is declared ultra vires the rest of the Act will not be affected in any way. We are here concerned chiefly with the validity of section 3 and sections 8 and 9, and the terms of section 10 did not in any way affect the other provisions of the Act. I would therefore hold that the Act cannot be held to be had merely because the provisions of section 10 are bad.

20. With regard to section 4 (as amended) I do not think that there is anything illegal or ultra vires in its provisions and Government may accept a lump sum from any particular owner of vehicles and this lump sum may well represent the exact amount which he would have paid, had a proper computation of his liabilities been made. Another point urged was that the Act was against the provisions of Articles 301 and 302 of the Constitution in as much as it resulted in a restriction on trade. It was argued that (1) the tax was a burden on transport: (2) it was a burden on inter State transport; and (3) the Act did not fall within the definition of ‘reasonable restriction’. I have already dealt with this point in the earlier part of my judgment while dealing with grounds Nos. 1 to 5 and 7 of the petition. The tax does not really cannot a restriction on inter-State trade. The tax is imposed upon all persons who ply their buses on the routes of the Punjab State. Had the Act provided for taxing only those vehicles which entered the State or which left the State for other States, it might have been argued with some measure of force that Articles 301 and 302 of the Constitution were contravened, but where the tax is imposed upon all vehicles irrespective of whether they run entirely within the boundaries of the State or only partially, there is no question of there being a restriction on inter-State trade. A restriction must be direct as laid down by their Lordships of the Privy Council in Commonwealth of Australia v. The Bank of New South Wales quoted above. This matter was also discussed in Atma Ram Budhia v. State of Bihar, by Sarjoo Prosad, J.—

“It is well settled that the Legislature in framing the legislation on a particular subject may incidentally encroach upon certain other fields of legislation but that will not affect the vires of the legislation so long as the legislature is acting within the bounds of the constitutional field allotted to it, and the primary object of the legislation falls within that bound. That is what is called the pith and substance rule; and the rule, in my opinion, applies with equal force to different subjects of legislation in the same list. Taxation is not a restraint on trade unless it is discriminatory in its character and is levied with the object of helping one person or party against the other.”

21. The last point urged was that the appointment of an authority under the Act amounted to delegation of legislative powers and therefore the Act was invalid. A reading of the Act shows that the authority is given certain executive powers and there is no question of delegation of legislative powers. This matter was considered in Alma Ram Budhia v. State of Bihar, and it was held that the appointment of the authority did not amount to delegation of legislative powers. Narayan, J. observed—

“The law thus is now quite clear on the subject, and if the impugned legislation is a valid legislation as contemplated by item 56 of the State List, then the powers which have been given to the ‘prescribed authority’ cannot be questioned. It is really no delegation if the choice of the prescribed authority is left entirely to the State Government.”

22. For the reasons given above, I would hold that apart from section 10, the Act impugned is not ultra vires the Constitution. The notice calling upon the petitioners Nos. 1 and 3 to appear before the Taxation Officer, Jullundur, and asking them to show cause why action should not be taken against them under section 17(1)(e) of the Act is therefore in no way invalid. This petition is accordingly liable to be dismissed and I would dismiss it with costs.

23. Falshaw, J.:— I agree.

24. Petition dismissed.