A. S. KARTHIKEYAN ETC. versus STATE OF KERALA & ANR.

Citation: [1974] 2 S.C.R. 321 · Decided: 20-11-1973 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

321 
A 
A. S. KARTHIKEYAN ETC. 
v. 
STATE OF KERALA & ANR. 
November 20, 1973 
[A. N. RAY, C.J., K. K. MATHEW, Y. V. Cl!ANDRACllUD, 
0 
A. ALAGIRISWAMI AND P. N, BHAGWATI, JJ.J _ . 
c 
D 
E 
F 
6-
H 
Ktrala Motor Ythlclt1 (TtJxarlan c/ Passtng111 and G0Dd1 .Amtfid1ntnt) · 
Acr (IS o/ 1971) ond.Motor 'Vthlclti (Ktrala Third Amtndmtnt) Act (34' 
of 1971)-l'alldll)' of. 
· 
· 
· S.ction 43 of tho Motor Vehicles .Act, 1939, lays down that tho Stile GoY· 
crnment may1 from time to time issue dlrecliac.s to the State Transport AUtbority' 
rca::i.rdina fix1n: of fares and freiihts for stage carriages and public carriag~'i 
and 1. 44(3) requires the State Transport Authority to give effect to auc:h dircc~ 
tioos. In exercise of these powers the fare structure had been fixed for atag·c:-
carriages in the respondent.State from time to time. In 1963, the respondent 
decided, to increase the motor vehicles tax, to introduce tax on passengers an& 
&oods, and to modify the fare structure suitabty for staa:e carriages. Accordingly' 
under the Kerala Motor Vehicles Taxation Act, 1963, the new rate of tax was 
fixed. 
Section 3 of the KeraJa Motor Vehicles (Taxation of Passcngen and 
. Goods) Act, 1963, provided that there shall be levied and paid to the Govema 
ment a tax on all passengers, luggage etc. and the compcsition fee wi9 fixed 
per uat per quarter. Also, after hearins the representations and objections of 
1hc operators and the public, there was a revision, as from July 1, 1963, of the 
fare structure of stage carriages in the State. Till July 1966, the operators 
collected tax on passengers and goods and paid the taxes to the Governmef.lt. 
But in 1966, the operators agitated for enhancement of fares and took the matter 
10 Court. In Thomman & Ori. v. The Regional Transport Officer, ErnakuTam It 
Anr. I.LR. 119681 2 Kerala U3.' tho High Court held that the tax under the 
t 96laAct (Taxation of Passengers and G6ods) was a tax on passeni:ers and goods 
and not on 1he oper~ton as contended by the operators. but held that the Act 
contained no saWfactory provision for its C9Uection, in that it was not clear: 
lhat the ta:it was payable· by the f!assengers to the operators. 
Thereafter, the Kerata l<lotor Vehicles (Taxation of Passengers and Good! 
Amendment) Act 18 of 1971 was passed amending the 1963-Act. Two new 
· sub-sections to s. 3 provided that the tax levied shall be paid by the passengers 
and consignors of 1he goods to the operators along with fares and freights and 
that the operators shall be liable to pay the tlx so levied to the Govemmem-. 
There was also a validating section in Act 18 of 1971, _which stated that taxes 
k:vied or coUected shalJ be deemed to be and to have always been levied or 
collected in accordance with Jaw as if s. 3 of the 1963·Act, as amended by Act 
18 of 1971 was in force at all material times. Another Act. ~lo1or __ Vehicles. 
(KeraJa Third Amendment) Act 34 of 1971. effected 2 principal changes. namely. 
(1) the addition of sub. s. (lA) to s. 43 of the Motor Vehicles Act which pro. 
vided that any direction regarding the fll:iog of fares and freights prospectively 
or retrospectively might provide that such fares and freightJ shall De inclusive 
of the tax payable by passengers or consignors of goods; and (2) a validating 
provision validating the directions. relatinit to fares i~<1ued on or ::ifter March 1. 
1963 10 be inclusive of the tax payable under the 1963·Act. With effect from 
October 15, 1971, the GoVemment also revised the rates of fare. 
The operators contended that: (1) ~provisions of Acts 18 and 34 Or t97t 
amounted to a ta:it not on 'P3S~n2ers and eoods but on the income of the OJ:era. 
ton. (2) the. retrospective validation of levy and collection amount to a tax on 
amounts collected as faro and therefore the tax wa.s a new tax on fare, and (3) 
the relro!pective validation was unreasonable b•cause the operaton were made 
liable for a tax which they did not In fact collect during the period July 196& 
to October 14 1971. when they were agitating for enhancement cf fare. 
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322 
SUPREME COURT REPORTS 
( 1974 J 2 S.C.R. 
Rejecting !he contentions. the Court, 
HELD: (I) The provisiom of the 1963-Act (taxation of passengm and 
. goods) indicate ·that the tax under that Act ia a tax on pusenaers and ownen 
of goods and that the operators only collected the tax. When pu!eDFfl and 
owners of goods pay the tax, the Government requires an agency to collect it 
. ~nd the operato

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