G. K. KRISHNAN ETC. ETC. versus THE STATE OF TAMIL NADU & ANR. ETC.

Citation: [1975] 2 S.C.R. 715 · Decided: 12-11-1974 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 7 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
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G. K. KRISHNAN ETC. ETC. 
v. 
THE STATE OF TAMIL NADU & ANR. ETC. 
November 12, 1974 
[A. N. RAY, C.J., K. K. MATHEW AND A. ALAGIRISWAMI, JJ.] 
Madril.I Motor Vehicles Taxation A.er (3 of 
1931)-,Tax on Contract 
Carriages enha11ced 1by notification-If 
violative 
of A.rt. 301-Motlve for 
enhancing tax, if relevant-If discriml11atory as compared to stage carrlaees 
tttrd violati've of A.rt. 14. 
The enhan::ement of motor vehicles tax on omnibuses imposed by the 
State Government, by notification dated September 20, 19711 from Ra. 30/· 
per seat per quarter to Rs. 100 per aeat per quarter was caallenged on the 
following arounds :-
(I) The notification was not a measure of taxation but a 
device 
to 
eliminate the competition of omnibuses with stage carriages run by the 
Government; 
(2l Since the tait operates as a restriction on 
the 
freedom 
of trade 
commerce and 'intercourse within the State, it could be imposed only by' 
a law which had obiained the previous sanction 
of the 
President · under 
Art. 304. and as the notification was issued by the government in the exer-
cise of its delegate power, it was not a {aw made by the legislatur0 nor 
could the previous sanction of the President be obtained for it; and 
(3) The distinction made between contract carriages and atage carriaae1. 
in the matter of levy of vehicle tait offends Art. 14. 
Rejecting the con!entions. 
HELD : 1. The tax was imposed by the Government in the exercise of 
its power under S. 4 of the Madras Motor Vehicles Taxation Act, 1931. A1 
the State Legislature was competent to pass the Act and as the Government 
is authorised under s. 4 to levy the tax, the question of the 
motive 
with 
which the tax was imppsed is immaterial. There can be ne> 
plea 
of 
a 
colourable exercise "! power to tax if the Government had power to impose 
the tax and the fact that the impe>sition of the tax was for the purpose of 
eliminating competition would not detract from its validity, 
[720A-B] 
2. (a) Article 301 imposes a general limitation on all legislative power.in 
order to secure that trade, commerce and intercourse throughou~ the territory 
of India shall be free. The word 'free' does not mean freedom from regula· 
tion. There is a distinction between laws interfering with freedom to carry 
out the activities constituting trade and law imposing . on 
those 
engaged· 
therein rules of proper conduct or other restraints directed to the due and 
orderly manner of carrying out the activities. This distinction 'is described 
as regulation. The true solution in any given case· could 
be · found 
by 
distinguishing between features of the transaction or activity 
in 
virtue. of 
which it fell within the category of trade, commeree and intercourse and 
those features which, though invariably found to occur "in some form or 
another in the transaction or action are not essential to the conception. What 
is relevant is the contrast between 
the essenti.al 
attributes of trade and 
commerce and the incidents of the transaction which do not give it necessarily 
the character of trade and commerce. Laws for government of su:h incidents. 
'regulate'. 
If a tax is compensa!ory or regulatory, it cannot operate as a 
restriction on the freedom of trade or commerce. A compensatory· tax la 
based on the nature and the extent of the use made of the roads. if the 
proceeds are de~oted to the repair, upkeep, maintenance of relevant 
roada 
and the collection of the exaction involves no substantial interference with 
the movement. 
What is essential for the purpose of securing 
freedom 
of · 
movement by road is that no pecuniary burden should be placed upon it 
716 
SUPREME COURT REPORTS 
[1975] 2 s.c.R. 
w bich goes beyond a proper recompeMi to the state for the actual use made 
of the physical facilities provided in the shape of a road. Motor nhicleir 
require, for their safe, efficient and ct:oniimica! use, roads 
of considerable 
width, hardness and durability, and. the maintenance of such. roads will C03t 
the government money .. But; because the users of vehicles· generally, mld of 
public motor vehicles in particular! ~tand in a special and direct relation 
t~ 
such roads, and may be said to denve a special and direct benefit from them, it 
is not unreasonable that they should be called upon to make a special contd· 
bution to th~ir m<iintenance over and above their general contribution as tax 
payers of the State. 
[721C-H; 722B-FJ 
( b) In the 

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