Chinnappa Reddy, J. - (1.) Civil Appeals Nos. 638, 656, 786 and 2632 of 1979 may be dealt with first as the principal submissions were made in these cases. The appellants are transport operators plying stage carriages and contract carriages between Delhi and Jammu and other places in the State of Jammu and Kashmir. Their carriages follow National Highways 1 and 1-A. They operate directly between Delhi and the other terminus in the State of Jammu and Kashmir, that is to say, they do not pick up or set down passengers or goods enroute. In the course of the journey it is necessary for them to travel through the State of Haryana as part of National Highway No. 1 passes through that State. The State of Haryana levies a tax on passengers and goods carried by motor vehicles, which we may call, for breviity's sake, 'passengers and goods tax'. The levy is made under the provisions of the Haryana Passengers and Goods Taxation Act, 1952. Sec. 3 (1) of the Act empowers the levy of a tax, to be paid to the State Government at such rates not exceeding 60% of the value of the fare or freight as the case may be, on all passengers and goods carried by a motor vehicle other than a private carrier. In the case of contract carriages and stage carriages the State Government is authorised to accept a lump sum in lieu of the tax chargeable on passengers and goods respectively, in the manner prescribed. Sec. 3 (3) deals with situations where a route lies partly within and partly outside the State of Haryana. It reads as follows:"S. 3 (3). When passengers and goods are carried by a motor vehicle on a 'joint route', the tax shall be payable in respect of fare or freight for the distance covered within the State at the rate laid down in this section. Explanation:For the purpose of this sub-section, 'joint route shall mean a route which lies partly in the State of Haryana and partly in some other State, or Union Territory'. The appellants question the vires of Section 3 (3) of the Haryana Passengers and Goods Taxation Act in so far as it permits the levy of tax on passengers and goods, carried by their carriages plying entirely along the National Highways. The Writ Petitions filed by them in the High Court of Punjab and Haryana were dismissed, the High Court upholding the vires of Section 3 (3). Hence these appeals.
(2.) Shri Soli Sorabji and Dr. Chitale who appeared for the appellants submitted that it was incompetent for the State Legislature to levy the passengers and goods tax on passengers and goods carried on National Highways. It was said:that Parliament alone had exclusive jurisdiction under Entry 23 read with Entry 97 of List I of the Seventh Schedule to the Constitution to legislate in respect of National Highways, including levy of taxes on goods and passengers carried on National Highways. It was further argued that Entry 56 of List II of Seventh Schedule to the Constitution which empowered the levy of taxes on goods and passengers carried by road merely authorised the levy of taxes which were of regulatory and compensatory nature. Consequently the taxing power of the State Legislature could only be exercised in respect of passengers and goods carried on roads maintained by the State Government and not on roads maintained by the Union Government. Under no circumstances, it was emphasised, could it be said that the levy of a tax which was as much as 60% of the fare was regulatory and compensatory in its nature. It was also submitted that Sec. 3 (3) of the Haryana Act interfered with the freedom of inter-State Trade, Commerce and Intercourse and was, therefore, violative of Art, 301 of the Constitution. It was not saved by Article 304 (b) as its provisions could not be describe as reasonable restrictions within the meaning of Art. 304 (b).
(3.) The constitutional and statutory provisions which require to be considered may now be set out. Entry 23 and Entry 97 of List I of the Seventh Schedule to the Constitution are as follows: "23. Highways declared by or under law made by. Parliament to be national highways.' "97. Any other matter not enumerated in List II or List III including, any tax not mentioned in either of those Lists'. Entries 22, 24, 25, 29, 30 and 89 of List I also throw light, as we will presently show and they are as follows: "22. Railways". "24. Shipping and navigation, on inland waterways, declared by Parliament by law to be national waterways, as regards mechanically propelled vessels; the rule of the road on such waterways. "25. Maritime shipping and navigation including shipping and navigation on tidal waters; provision of education and tRaming for the mercantile marine and regulation of such education and tRaming provided by State and other agencies". "29. Airways; aircraft and air navigation; provision of aerodromes; regulation and organisation of air traffic and of aerodromes; provision for aeronautical education and tRaming and regulation of such education and tRaming provided by States and other agencies. "30. Carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels." "89. Terminal taxes on goods or passengers, carried by railway, sea or air, taxes on railway fares and freights". Entry 13, Entry 56 and Entry 57 of List II are as follows: "13. Communications, that is to say, roads, bridges, ferries, and other means of communication not specified in List I; municipal tramways; ropeways; inland waterways and traffic thereon subject to the provisions of List I and List III with regard to such waterways; vehicles other than mechanically propelled vehicles". "56. Taxes on goods and passengers carried by road or on inland waterways". "57. Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List III".;