The Assessing Authority under the Act of 1955, Respondent No. 3 herein, assessed the liability of the appellant-NHPC Ltd. to pay passenger tax under the Act 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. Assessment Orders were passed on 01 October, 1992 stipulating the liability of the appellant, NHPC Ltd. to pay passenger tax under the Act of 1955, on the premise that its employees and their children were passengers under the Act and therefore, the appellant was liable to pay passenger tax for providing them with transport facilities as described hereinabove. It is to be stated at this juncture that the Assessment Orders were passed on the assumption that every bus of the appellant, NHPC Ltd. was plying on every day of the relevant years; a passenger travelled on every seat of every bus; and every employee travelled the full distance shown in the logbook. (Para 3.3)
By the Judgment and Order dated 27 March, 1997, the Division Bench of the High Court allowed Civil Writ Petition No.1733 of 1995 filed by the appellant and directed the Respondents to refund the tax collected under the provisions of the Act of 1955. (Para 3.6)
In that background, on 13 August, 1997, the Himachal Pradesh Passengers and Goods (Amendment & Validation) Ordinance was promulgated. The Himachal Pradesh Legislative Assembly passed the Amendment and Validation Act of 1997 on 27 September, 1997 with a view to remove the basis of the judgment of the Division Bench of the High Court dated 27 March, 1997. By virtue of the Amendment and Validation Act of 1997, definitions of the terms ‘business’, ‘fare’, ‘freight’ and ‘passenger’ were amended. Further, definitions of terms such as ‘Private Service Vehicle’, ‘road’, ‘Transport Vehicle’, came to be introduced. Explanation (1) to Section 3 (1) of the Act of 1955, which was the charging provision in the said Act, was omitted and Sub-section (1A) was inserted in Section 3, which was to serve as a charging provision. The nuances of the amendments introduced by the Amendment and Validation Act of 1997 shall be adverted to at a later stage. (Para 3.8)
Accordingly, the Authorities constituted under the Act, issued notices to the appellant for recovery of tax under the provisions of the Amendment and Validation Act of 1997, in respect of the appellant’s activity of providing transport facilities to its employees and their children. (Para 3.9)
i. Whether, by enacting the 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 March, 1997, whereby the Act of 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? iii. Whether the impugned judgment of the High Court calls for any interference? iv. What order? Legal Framework (Para 6 )
We do not find the said argument is acceptable. As observed hereinabove, the amended definition of the term ‘business’ includes within the scope of the term, not only the business of carrying passengers and goods, but also any other trade, commerce, manufacture or concern, whether or not the same is carried on with a motive to earn profit. Further activities incidental and ancillary to such trade, commerce, manufacture or concern are also included within the ambit of ‘business’. As per the amended definition, it is not necessary for either the primary business, trade or manufacture, or the ancillary activity to be related to the business of carrying passengers and goods. That is the very purpose of the amendment. The definition of ‘business’ as amended has the widest amplitude and includes any trade, commerce, manufacture, adventure or concern. (Para 18)
In the result we arrive at the following conclusions: i. The Act of 1955, as amended by the Amendment and Validation Act of 1997, is valid. The said Act seeks to impose tax on passengers and goods carried by road in motor vehicles and the Himachal Pradesh Legislative Assembly possessed the legislative competence under Article 246, read with Entry 56 of List II of the Seventh Schedule of the Constitution of India, to enact the Act of 1955 and the Amendment and Validation Act of 1997. ii. 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 March, 1997, inter-alia, by amending the definition of the term ‘business’; defining 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. iii. The activity of the appellant in providing gratis transportation 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)
As there has been a long passage of time since the enactment of the Amendment and Validation Act of 1997, that is about twenty-six years till date and by now there would have been replacement of the motor vehicles or buses by the appellants and their liability to pay the said taxes, being at large, and now set at rest, we think that, in exercise of our powers under Article 142 of the Constitution, the appellants should be made liable to pay the tax w.e.f. 01.04.2023, the current financial year onwards and not for the period prior thereto. One of the reasons for directing so is by bearing in mind that the affected appellants herein are not private bus operators or stage carriage operators but are public sector units engaged in hydro-power projects and irrigation projects and as a convenience or facility, owning buses for transporting their employees and children of the employees to the work sites and to schools and return to their homes as a facility being provided to them for the reasons narrated above. That apart, we have now held that by enacting the Amendment and Validation Act of 1997, the lacunae pointed out by the High Court vide the judgment and order dated 27 March, 1997 have been removed. Therefore, saddling the appellants with any anterior demand would not be just and proper. We order accordingly. Therefore, while moulding the relief to be given to the appellants herein, only with regard to the period from which the liability to pay tax under the Act of 1955 as amended by the Amendment and Validation Act of 1997, the appeals stand dismissed. (Para 26)
SUPREME COURT OF INDIA
2023 STPL(Web) 248 SC
[2023 INSC 810]
Nhpc Ltd. Vs. State Of Himachal Pradesh Secretary & Ors.
Civil Appeal No. 3948 Of 2009 With Civil Appeal Nos. 4738-4743 Of 2009 And Civil Appeal No. 6931 Of 2009-Decided on 6-9-2023
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