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Issues for consideration: (i)Whether, by enacting the HimachalPradesh Passengers and Goods (Amendment and Validation) Act of 1997,the Himachal Pradesh State Legislature had validly removed the basis ofthe judgment of the Division Bench of the High Court dated 27.03.1997,whereby the Himachal Pradesh Passengers and Goods Taxation Act, 1955had been held not to include within its scope the activity of the appellantsof providing gratis transport facilities for their employees and their children.(ii) Whether the activity of the appellants of providing gratis transportfacilities for their employees and their children, would now be a taxableactivity 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, 1997and taxability of transport facility provided by the appellant for theiremployees and children:Held: By enacting the Amendment and Validation Act of 1997, theHimachal Pradesh State Legislature has validly removed the basis of thejudgment 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 theterms ‘fare’, ‘freight’ and ‘road’; deleting the Explanation to Section 3(1);and inserting Section 3(1A) which brought non-fare paying passengers atpar with fare-paying passengers for the purpose of levying tax under theAct – Thus, the Amendment and Validation Act of 1997 is a valid piece ofLegislation – The activity of the appellant in providing gratis transportation to its employees, and their children, would be a taxable activity under Section3(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 judgmentdated 27.03.1997 and pointed out lacunae in the Act of 1955 – By way ofthe Amendment and Validation Act of 1997, amendments were broughtabout to the Preamble and various provisions of the Act of 1955 withretrospective eff ect, viz. date of enforcement of the Act of 1955 – Whena competent legislature retrospectively removes the substratum orfoundation of a judgment to make it ineff ective – Valid legislativeexercise or not:Held: A legislature cannot directly set aside a judicial decision– However, when a competent legislature retrospectively removes thesubstratum or foundation of a judgment to make the decision ineff ective, thesame is a valid legislative exercise provided it does not transgress on anyother constitutional limitation – Such a legislative device which removesthe vice in the previous legislation which has been declared unconstitutionalis not considered to be an encroachment on judicial power but an instanceof abrogation recognised under the Constitution of India – The variousdecisions of the Supreme Court show that it is open to the legislature toalter the law retrospectively, provided the alteration is made in such amanner that it would no more be possible for the Court to arrive at the sameverdict – In other words, the very premise of the earlier judgment should beremoved, thereby resulting in a fundamental change of the circumstancesupon which it was founded – It would be permissible for the legislature toremove a defect in an earlier legislation, as pointed out by a constitutionalcourt in exercise of its powers by way of judicial review – This defect canbe removed both prospectively and retrospectively by a legislative processand 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 machinerycharacterised by institutional checks and balances, lies in recognising that while due deference must be shown to the powers and actions of the othertwo branches of the government, the power of judicial review may beexercised to restrain unconstitutional and arbitrary exercise of power by thelegislature and executive organs – The power of judicial review is a partof the basic feature of Constitution which is premised on the rule of law –Unless a judgment has been set aside by a competent court in an appropriateproceeding, fi nality and binding nature of a judgment are essential facetsof the rule of law informing the power of judicial review – In that context,while it may be open to the legislature to alter the law retrospectively, soas to remove the basis of a judgment declaring such law to be invalid, it isessential that the alteration is made only so as to bring the law in line withthe decision of the Court – Simply setting at naught a decision of a courtwithout removing the defects pointed out in the said decision, would soundthe death knell for the rule of law – The rule of law would cease to haveany meaning if the legislature is at liberty to defy a judgment of a courtby simply passing a validating legislation, without removing the defectsforming the substratum of the judgment by use of a non-obstante clause asa technique to do so. [Para 13]Constitution of India – Legislative device of abrogation –Retrospective amendments – Permissibility of:Held: The device of abrogation, by way of introducing retrospectiveamendments to remove the basis of a judgment, may be employed whena legislature is under the bonafi de belief that a defect that crept into thelegislation as it initially stood, may be remedied by abrogation – An act ofabrogation is permissible only in the interests of justice, eff ectiveness andgood governance, and not to serve the oblique agenda of defying a court’sorder, or stripping it of its binding nature. [Para 14]Constitution of India – The power of abrogation is to be exercisedfollowing principles:Held: (i) There is no legal impediment to enacting a law to validate alegislation which has been held by a court to be invalid, provided, such a lawremoves the basis of the judgment of the court, by curing the defects of thelegislation as it stood before the amendment; (ii) The validating legislationmay be retrospective – It must have the eff ect that the judgment pointingout the defect would not have been passed, if the altered position as sought to be brought in by the validating statute existed before the court at thetime of rendering its judgment; (iii) Retrospective amendment should bereasonable and not arbitrary and must not be violative of any Constitutionallimitations; (iv) Setting at naught a decision of a court without removingthe defect pointed out in the said decision is opposed to the rule of law andthe scheme of separation of powers under the Constitution of India; (v)Abrogation is not a device to circumvent an unfavourable judicial decision– If enacted solely with the intention to defy a judicial pronouncement, anAmendment and Validation Act of 1997 may be declared as ultra-vires.[Para 15]Himachal Pradesh Passengers and Goods Taxation Act, 1955 –Himachal Pradesh Passengers and Goods (Amendment and Validation)Act of 1997 – Import of the Act of 1955 Act as amended by theAmendment and Validation act of 1997:Held: The Preamble which provides that it has been enacted toprovide for levying a tax on passengers and goods carried by road in motorvehicles – Such a tax falls within the legislative fi eld governed by Entry56 of List II of the Seventh Schedule of the Constitution – Simply for thereason that notices have been issued to the owners or assessment ordershave been passed against the owners of the vehicles, it cannot be said thatthe tax is levied on the motor vehicles – If the persons carried happen tobe employees of the owners of the buses, such employees should pay thetax – When the employer, i.e., the owner of the vehicle, does not collectthe tax from such employees, he should himself pay it, in discharge ofthe employer’s statutory duty as an agent of the State to collect tax on thebasis of the amended provision – Whether to collect the tax payable fromthe passengers (the employees and their children) or discharge the liabilityitself is the prerogative of the appellants. [Para 22] |
