KHYERBARI TEA CO. LTD. &ANR. versus THE STATE OF ASSAM

Citation: [1964] 5 S.C.R. 975 · Decided: 13-12-1963 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Cited by 15 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

• 
5 S.C.R. 
SUPREME COURT REPORTS 
975 
KHYERBARI TEA CO. LTD. &ANR. 
v. 
THE STATE OF ASSAM 
(P.B. GAJENDRAGADKAR, 
A.K. SARKAR, 
K.N. 
WANCHOO, 
K.C. DAs GUPTA AND N. RAJAGOPA1'A 
AYYANGAR, JJ.) 
Constitution of India, 1950, Arts. 301, 304(b) and Seventh 
Schedule, List JI, Entry 56-Assam Taxation (on Goods carried 
by Road or on Inland Water-ways) Act (Assam Act X of 1961)-
Constitutional validity. 
This petition challenges the constitutional validity of the 
Assam Taxation (on Goods carried by Road or on Inland Water-
ways) Act, 1961. The previous Act of 1954 having been declared 
constitutionally invalid by this Court in Atiabari Tea Co. Ltd. 
v. State of Assam [1961] I S.C.R. 809, the Assam Legislature with 
the previous sanction of the President of India under Art. 304(b) 
of the Constitution, passed the impugned Act with retrospective 
effect from the date on which the Act of 1954 had been promulgated 
and its provisions were except for certain additional provisions 
substantially the same. The Assam High Court which was moved 
under Art. 226 of the Constitution held that the Act was constitu-
tionally invalid. The State of Assam applied for and obtained 
certificates to appeal to this Court. The present petitioners moved 
this Court under Art. 32 of the Constitution. Since petitioner 
No. I was a company and as such its petition was incompetent, 
petitioner No. 2, the Manager of the company, was heard and 
some of the respondents in the appeals to be preferred by the 
State of Assam were allowed to intervene in the present proceedings. 
The case of petitioner No. 2 was that the company exported 
tea grown and manufactured in its own garden from Goalpara in 
Jalpaiguri District to Calcutta. The booking station and the 
destination were both in West Bengal, the total distance between 
them being 689 miles of which only It to 2 miles of inland water-
ways Jay in the State of Assam. The tea was carried by railway 
from Goalpara to Dhubrighat and thereafter by ferries on inland 
waterways and transhipped to steamers at the said Ghat. It 
was contended that ss. 3 and 34, which were the material provisions 
of the Act, were invalid and that the Assam Legislature was in-
competent to enact the said provisions which constituted unreason-
able restrictions on the freedom of trade guaranteed by Art. 301 
and infringed Art. 19(1)(g) of the Constitution. 
Held. 
(per Gajendragadkar, Wanchoo, Das Gupta and 
Ayyangar JJ .), As the impugned Act was not found to be com-
pensatory by the High Court nor was it claimed to be so by the 
State the only question that fell to be decided in this petition 
was whether the restrictions imposed by the impugned Act were 
1963 
December 13 
976 
SUPREME COURT REPORTS 
[1964] 
1963 
reasonable and in the public interest within the meaning of Art. 
304(b) of the Constitution. 
Khyerbari Tea 
Atiabari Tea Co. Ltd. v. State of Assam, [1961] I S.C.R. 809, 
Co. Ltd. &Anr. and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, 
v. 
[1963] I S.C.R. 491, explained. 
The State of 
The entries in the three lists In the Seventh Schedule must 
Assam 
be given the widest possible interpretation. Power conferred on 
the Legislature to levy tax must be widely construed so as to include 
the power to select the taxable articles, to fix the rates, to prescribe 
the machinery for recovery, to prevent evasion and to prescribe 
the procedure for determining the amount payable by any individual. 
It could not be assumed that Entry 56 of List II, in giving the 
Legislature the power to enact the impugned Act, required that 
the tax must be levied only against the owner of the goods that 
were carried or against persons who carried them_. If the tax 
was really levied on goods carried, the Legislature was free to 
prescribe the machinery for its recovery. 
R.C. Jail v. Unfrm of India. [1962] Supp. 3 S.C.R. 436, Sardar 
Ba/dev Singh v. Commissioner of Income-tax, Delhi & Ajmer. 
[1961] l S.C.R. 482 and Orient Paper Mills Ltd. v. State of Orissa. 
[1962] I S.C.R. 549, referred to. 
Section 3(1) of the impugned Act which imposed the tax and 
s. 3(2) which made the producer liable to pay it could not therefore 
be impugned on the ground of legislative incompetence. 
M' Cullock v. 
Maryland, (1819)4 L. Ed. 579, considered. 
But the machinery set up for recovery of the tax should have 
a rational connection with the tax. The absence of such a nexus 
between them would make the tax liable to attack as being

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