| Citation | {Civil Appeal Nos. 6931 of 2009} |
| Date of Judgement | 6th September, 2023 |
| Court | Supreme Court of India |
| Case Type | Constitution of India |
| Appellant | NHPC Ltd. |
| Respondent | State of Himachal Pradesh |
| Bench | Justice B.V. Nagarathana, Justice Ujjal Bhuyan |
| Referred | “the State Legislatures may legislate both retrospectively and prospectively with an intention to cure the defects in the original laws or Acts.” |
FACTS OF THE CASE:
In the aforementioned case, the Appellant i.e., NHPC Ltd. was engaged in the business of electricity generation and has several projects undergoing in the State of Himachal Pradesh. Many of its project sites were at a distance from the residential colonies of its workers, thus as a step towards welfare of their worker NHPC has been providing free of cost transport services to and from there work sites and also for their children to travel to and from their school. However, with the enactment of Act 1955, NHPC was made liable to pay passenger tax for the transportation services for the years 1984-1985 to 1986-1987 and 1987-1988 to 1990-1991 in respect of the activity of providing transport facilities to its employees and their children. The Appellant filed a writ petition in this respect before the High Court of Himachal Pradesh.
The High Court ordered to refund the tax collected, stating that in the absence of any parameter as to what a normal rate or fare of bus should be, the respondent could not have levied tax on NHPC based on any kind of assumptions. In furtherance to this it also stated that the charging provision could not be given effect unless the terms normal rate and route has been expressly and unambiguously defined.
Subsequently, the Himachal Pradesh Legislative Assembly has enacted the “Himachal Pradesh Passengers and Goods (Amendment and Validation) Act”, wherein it has defined the terms like ‘business’, ‘passenger’, ‘freight’, ‘fare’, ‘Private Service Vehicle’, ‘Road’, ‘Transport Vehicle’ etc., apart from this it also introduced a new charging provision with a retrospective effect. Accordingly, the appellant was issued a notice by the respondent authorities for the recovery of taxes under the provision of the said Act.
In response to this activity of the respondent, appellant has filed an appeal before the High Court challenging the Amendment and Validation Act, 1997, which was dismissed by the court.
The impugned case was then brought before the Hon’ble Supreme Court of India.
ISSUE:
Before the Apex Court the following issue has been raised:
- Whether the Himachal Legislative Assembly was correct in reversing the order of the Division Bench of High Court by enaction the Amendment and Validation Act, 1997?
ARGUMENTS:
Appellant’s Arguments: The Learned Counsel appearing on the behalf of the appellant argued that since the buses and other motor vehicles of the appellant were used to ferry the employees to the working sites and the children of their employees to schools without collecting any fare from them, thus they were just travel gratis and not the travelers. And the taxes have already been levied on the appellant. In furtherance to this the counsel also submitted that in true sense the amendment act talks about the levying and collecting taxes only on the motor vehicles.
Drawing the difference between the tax on the income operators and passenger tax, the counsel has cited the case of A.S. Karthikeyan Vs. State of Kerela. Referring to this case it concluded that in the impugned case the incidence of tax was on the appellant and not on the passengers therefore the appellant couldn’t collect the tax from the passengers and then pay it to the Respondent Authority.
Respondent’s Argument: The Learned Counsel appearing on the behalf of the respondent argued in favour of the impugned judgement submitting that the Amendment and Validation Act 1997 has validly addressed the deficiencies in the Act of 1995 and has accordingly removed the basis of the Division Bench’s judgement dated 27th March 1997.
JUDGEMENT:
The Apex Court after taking into consideration all the facts and arguments presented by both the parties upheld the validity of the Amendment and Validation Act,1997, thus leading to the dismissal of the present appeal. The bench held that the State legislature has without any wrong intentions to overrule the judgement of the Division Bench of the High Court only tried to cure the defects in the Act of 1995 through the amendments.
Further the court has also laid down certain principles that are needed to be followed by the State Legislatures while exercising the abrogation powers. The bench in this respect has also cited the case of Tirath Ram Rajendra Nath Vs. State of Uttar Pradesh, wherein this court has drawn the difference between the intrusion by the legislature in the power of the judiciary and the nullification of laws by the legislature both retrospectively as well as prospectively by exercising a constitutionally valid power. While the later being invalid, the legislature may nullify any legislation retrospectively curing the defects therein, thus removing the basis of judgement of the courts.
The bench also cited the case of Cheviti Venkanna Yadav Vs. State of Telangana, wherein it was held that the legislatures without any intention to overrule the judgement or encroaching the powers of the judiciary may legislate the laws curing the defects therein.
The constitution grants power to the legislatures to legislate the laws validating the defects of the Acts. The legislatures were given power to legislate both retrospectively and prospectively to a reasonable degree. The courts could not interfere in this act of the legislature being exercised validly solely on the basis that it removes the basis of judgment of the court without there being any intention to do so.
However, the legislatures must not legislate with the intent to validate any Act which was previously declared or pronounced to be invalid by the courts, without curing the defects in the original legislation which was struck down by the court.
The legislatures must act in the interest of justice, effectiveness, efficiency, good governance. It could be used as an instrument to circumvent the unfavorable judgement of the court, if it does so then it would be considered as ultra vires and thus held to be illegal.
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