NHPC LTD. versus STATE OF HIMACHAL PRADESH SECRETARY & ORS.

Citation: [2023] 12 S.C.R. 1 · Decided: 06-09-2023 · Supreme Court of India · Bench: B.V. NAGARATHNA · Disposal: Dismissed

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Judgment (excerpt)

[2023] 12 S.C.R. 1 : 2023 INSC 810
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CASE DETAILS
NHPC LTD.
V.
STATE OF HIMACHAL PRADESH SECRETARY & ORS.
(Civil Appeal No.3948 of 2009)
SEPTEMBER 06, 2023
[B. V. NAGARATHNA AND UJJAL BHUYAN, JJ.]
HEADNOTES
Issues for consideration: (i)Whether, by enacting the Himachal 
Pradesh Passengers and Goods (Amendment and Validation) Act of 1997, 
the Himachal Pradesh State Legislature had validly removed the basis of 
the judgment of the Division Bench of the High Court dated 27.03.1997, 
whereby the Himachal Pradesh Passengers and Goods Taxation Act, 1955 
had been held not to include within its scope the activity of the appellants 
of providing gratis transport facilities for their employees and their children.
(ii) Whether the activity of the appellants of providing gratis transport 
facilities for their employees and their children, would now be a taxable 
activity under Section 3(1-A) of the Amendment and Validation Act of 1997.
Himachal Pradesh Passengers and Goods Taxation Act, 1955 – 
Himachal Pradesh Passengers and Goods (Amendment and Validation) 
Act of 1997 – Validity of the Amendment and Validation Act, 1997 
and taxability of transport facility provided by the appellant for their 
employees and children:
Held: By enacting the Amendment and Validation Act of 1997, the 
Himachal Pradesh State Legislature has validly removed the basis of the 
judgment of the Division Bench of the High Court dated 27.03.1997, 
inter-alia, by amending the defi nition of the term ‘business’; defi ning the 
terms ‘fare’, ‘freight’ and ‘road’; deleting the Explanation to Section 3(1); 
and inserting Section 3(1A) which brought non-fare paying passengers at 
par with fare-paying passengers for the purpose of levying tax under the 
Act – Thus, the Amendment and Validation Act of 1997 is a valid piece of 
Legislation – The activity of the appellant in providing gratis transportation 
SUPREME COURT REPORTS 
[2023] 12 S.C.R.
2
to its employees, and their children, would be a taxable activity under Section 
3(1-A) of the Amendment and Validation Act of 1997. [Para 23(ii), (iii)]
Himachal Pradesh Passengers and Goods Taxation Act, 1955 – 
Himachal Pradesh Passengers and Goods (Amendment and Validation) 
Act of 1997 – The Division Bench of the High Court passed a judgment 
dated 27.03.1997 and pointed out lacunae in the Act of 1955 – By way of 
the Amendment and Validation Act of 1997, amendments were brought 
about to the Preamble and various provisions of the Act of 1955 with 
retrospective eff ect, viz. date of enforcement of the Act of 1955 – When 
a competent legislature retrospectively removes the substratum or 
foundation of a judgment to make it ineff ective – Valid legislative 
exercise or not:
Held: A legislature cannot directly set aside a judicial decision 
– However, when a competent legislature retrospectively removes the 
substratum or foundation of a judgment to make the decision ineff ective, the 
same is a valid legislative exercise provided it does not transgress on any 
other constitutional limitation – Such a legislative device which removes 
the vice in the previous legislation which has been declared unconstitutional 
is not considered to be an encroachment on judicial power but an instance 
of abrogation recognised under the Constitution of India – The various 
decisions of the Supreme Court show that it is open to the legislature to 
alter the law retrospectively, provided the alteration is made in such a 
manner that it would no more be possible for the Court to arrive at the same 
verdict – In other words, the very premise of the earlier judgment should be 
removed, thereby resulting in a fundamental change of the circumstances 
upon which it was founded – It would be permissible for the legislature to 
remove a defect in an earlier legislation, as pointed out by a constitutional 
court in exercise of its powers by way of judicial review – This defect can 
be removed both prospectively and retrospectively by a legislative process 
and previous actions can also be validated. [Paras 11 and 12]
Constitution of India – Alteration of law retrospectively – 
Separation of powers between legislature, executive and the judiciary 
– Power of Judicial Review – Power of Legislature – Rule of Law:
Held: The role of the judiciary in galvanising constitutional machinery 
characterised by institutional checks and balances, lies in recognising that 
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while due deference must be shown to the powers and actions of the other 
two branches o

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