THE AUTOMOBILE TRANSPORT (RAJASTHAN) LTD. versus THE STATE OF RA.JASTHAN AND OTHERS

Citation: [1963] 1 S.C.R. 491 · Decided: 09-04-1962 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed

Cited by 28 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

1 s.c.R. 
SUPREME COURT REPORTS 
491 
THE AUTOMOBILE TRANSPORT 
(RAJASTHAN) LTD. 
v. 
THE STATE OF RA.JASTHAN AND OTHERS 
(And Connected Appeals) 
(S. K. DAS, J. L. KAPUR, A. k. SARKAR, K. SUBBA. 
RAO, M. HIDAYATULLAH, N. RAJAGOPALA 
AYYANGAR and J. R. MUDHOLKAR1 JJ.) 
Fre~om of Trade-State carriages-Tax on Vehicles--Btafe 
law imposing tax on vehicles used in public place. or kept for 
use--Oonstitutional validity-Rajasthan Motor Vehicles Tax· 
ation .Act, 1951 (Rajasthan 11 of 19.SZ), Rll, 4, 11, Bcher11ul~­
Oonstitution of India, .Arts. 19, 245, 301, 304 Sevr:.nth Sch. List I, 
entry 42, List JI, entry 57. 
Sub-section (1) of s. 4 of the Rajasthan Motor Vehicles 
Taxation Act, l 951. provided : 
" ...... No motor vehicle 
shall be used in any public place or kept for use in Rajasthan 
unless the owner thereof has paid in rcsper.t of it, a tax at the 
appropriate rate specified in the schedules to this Act within 
the time allowed ...... " 
The appellants were carrying on the business of plying 
shge carriages in the State of Ajmer. 
They held permits and 
plied their buses on diverse routes. There was one route 
which lay mainly in Ajmcr State but it crossed narrow strips 
of the te1Titory of the State of Rajasthan. Another route, 
Ajmcr to Kishangarh, was substantially in the Ajmer State, 
but a third of it was in Rajasthan. Formerly, there was an 
agreement between the Ajmer State and the former State ()f 
K.ishan~arh, by which neither State charged any tax or fees 
on vehicles registered in Ajmer or K.ishangarh. Later, Kishan-
· garh became a part of Rajasthan. On the passing ()f the 
Rajasthan Motor Vehicles Taxation Act, 
1951, and the 
pr()mulgation of the rules made thcrcund~r, the Motor Vehicles 
Taxation Qfficcr,.Jaipur, demanded of the appellants payment 
of the tax due on their motor Vehicles for the period April 1, 
1951, to March 3 l, 1954. By virtue of the provisions ()f s. 4 
()f the Act read with the Schedules no one could use or keep 
a motor vehicle in Rajasthan without paying the appropriate 
. tax for it and if he did so he was made liable to the penalties 
imposed under s. I l of the Act. The appellants challenged 
the legality of the demand on the grounds that s. 4 of the Act 
read with the Schedules constituted a direct and immediate 
1962 
April 9, 
1962 
Automobile 
Tf'ansp01t 
(R•Jast""") Ltd. 
v. 
Stall of Raa5tha n 
492 SUPREME OOURT REPORTS [1963] 
restriction on the movement of trade and commerce with and 
within Rajasthan inasmuch as motor vchiclr:S which carried 
passengers and goods within or through Raja•than had 
to 
pay the tax which imposed a pecuniary burden on a com· 
mercial activity and was, therefore, hit by Art. 301 of the 
Constitution of India and was not saved by Art. 304(b) 
inasmuch as the proviso to Art. 304(b) was not complied with, 
nor was the Act assented to by the President within the 
meaning of Art.· 255 of the Constitution. The respondents 
claimed that taxation for the purpose of raising revenue or 
for the maintenance of roads etc., was not hit by Art. 30 I and 
that the Act did not constitute an immediate or direct imp· 
edimcnt to the movement of trade and commerce inasmuch as 
the tax impnsed was a consolidate tax on the vehicle itself 
though the quantum of ·the tax was fixed in some instances 
with reference to the seating capacity or loading capacity etc. 
Held (per S. K. Das, Kapur, Sarkar and Subba Rao, 
JJ.), that the Rajasthan Motor VehiclesT .. xation Act 1951, did 
not violatr, the provisions ot Art. 301 of the Constitu1ion of 
India and that the taxes imposed under the Act were comp· 
ensatory or rrgu1atory taxc~ which did not hinder the freedom 
of trade, commerce and intercourse assurcd __ by that Article. 
Such taxes, therefore, were legal. 
Per S. K. Das, Kapur and Sarkar, JJ.-(1) The con· 
cept of freedom of trade, commerce and intercourse postulated 
by Art. 30 I must be understood in the context of an ordinary 
society and as part of a Constitution which envisaged a 
distribution of powers between the States and the Union, and 
if so understood, the concept must recognised the n•ed and 
legitimacy of some de!!fCe of regulatory control, whether by the 
Union or the State!!!. Regulatory measures or measures impos• 
ing compensatory taxes for the use of trading faciliti~s did not 
hamper trade, commerce and intercourse but rather facilitated 
them and, therefore, were not hit by the freedom declared by 
Art. 301 ; such measures need out co

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