PETITIONER:
MISRILAL JAIN ETC. ETC.
Vs.
RESPONDENT:
STATE OF ORISSA & ANOTHER
DATE OF JUDGMENT02/05/1977
BENCH:
CHANDRACHUD, Y.V.
BEG, M. HAMEEDULLAH (CJ)
BHAGWATI, P.N.
KRISHNAIYER, V.R.
UNTWALIA, N.L.
FAZALALI, SYED MURTAZA
KAILASAM, P.S.
CITATION:
1977 AIR 1686 1977 SCR (3) 714
1977 SCC (3) 212
ACT
Orissa Taxation (On goods carried by Roads or Inland
Waterways) Act 8 of 1968--Sections 3 and 27--Constitutional
validity of.
HEADNOTE
The Orissa Taxation (On goods carried by Roads or Inland
Waterways) Act 7 of 1959 and the Orissa Taxation (On Goods
carried by Road or Inland Waterways) Validation Act 18 of
1962 were struck down by this Court on 10-8-1967 as invalid
and it was held that the respondents were not entitled to
recover any tax from the appellants under the aforesaid
Acts. On March 26, 1968, the Orissa Taxation (On Goods
carried by Roads or Inland Waterways) Act 8 of 1968 was
passed after obtaining the previous sanction of the Presi-
dent under Art. 304 of the Constitution to the moving of the
Bill, imposing the same levy which it had unsuccessfully at
tempted to levy under the Actor 1959 and to validate under
the Act Of 1962. By section 1(3) of the 1968 Act, the Act
was to be deemed to have come into force on April 27, 1959
being the date on which the Act of 1959 had come into force.
Section 27 of the Act provides that notwithstanding the
expiry of the Act of 1959 and notwithstanding anything
contained in any judgment decree or order of any court, all
assessments made; all taxes imposed or realised any liabili-
ty incurred or any action taken under the, Act of 1959 shall
be deemed 10 have been validly made, imposed, incurred or
taken under the corresponding provisions of the Act 1968.
The claims of some of the appellants who had asked for
refund of the tax collected under the Act of 1962 which was
held unconstitutional, having been refused by the Govern-
ment, they filed writ petitions in the Orissa High Court
challenging the validity of the 1968 Act. The High Court
dismissed the writ petitions.
In appeal to this Court by special leave, the Court,
HELD: (1) The impugned enactment is a valid exercise of
legislative power and is in no sense a fraud on the Consti-
tution. Since it is well established that the power to
legislate carries with it the power to legislate retrospec-
tively as much as prospectively, the circumstance that an
enactment operates entirely in the past and has no prospec-
tive life cannot affect the competence of the Legislature to
pass the enactment if it falls within the list on which
that competence can operate. As regards the power to pass a
validating Act, that power is essentially subsidiary to the
legislative competence to pass a law under an appropriate
entry of the relevant list. [718 B-E]
Khyerbari Tea Co. Ltd. v. State of Assam [1964] 5 S.C.R.
975, applied.
(2) In the instant case, the State Legislature passed an
independent enactment in 1968 after complying with the
constitutional requirements. but it gave to that enactment
retrospective effect from the date that the 1959 Act had
come into force and it created a legal fiction which was
permissible for it do, that all actions taken under the Act
of ’1959 shall be deemed to have been taken under the Act of
1968. [717 FG]
Jawaharmal v. State of Rajasthan [1966] 1 SCR 890, not
applicable.
(3) If the vice from which an enactment suffers is cured
by due compliance with the legal or constitutional require-
ment, the Legislature has
715
competence to validate the enactment and such validation
does not constitute an encroachment on the functions of the
judiciary. The validity of a validating taxing law depends
upon whether the legislature possesses the competence over
the subject-matter of the law; whether in making the valida-
tion it has removed the defect from which the earlier enact-
ment suffered and whether it has made due and adequate
provision in the validating law for a valid imposition of
the tax. [718 G-H]
Prithvi Cotton Mills v. Broach Borough Municipality
[1970] 1 SCR 388; Tirath Ram Rajindra Nath v. State of
U.P.A.I.R. 1973 SC 405 and Government of Andhra Pradesh v.
Hindustan Machine Tools Ltd. (1975) Supp. SCR 394 referred
to.
(4) If any appeal challenging an order of assessment is
filed beyond the period of limitation and the authority is
satisfied that the appeal could not be filed within limita-
tion for the reason that the Acts of 1959 and 1962 were held
to be unconstitutional, the delay in filing. the appeal can
be condoned under the second proviso to section 12 of the
Act of 1968. If any appeal filed for challenging the order
of assessment was withdrawn or not pursued for the reason
that the two Acts were held unconstitutional, the authority
concerned can pass appropriate orders reviving the
appeal.[719 D-F]
Observation:
It
is hoped that Art. 144A. introduced by the 42nd
Amendment will engage the prompt attention of the Parliament
so that it may, by so that it may, by general con-
sensus, be so amended as to general consensus, be
so amended as to leave to the court itself the duty
to decide how large a Bench should decide any particular
case. A court which has large arrears to contend
with has now to undertake an unnecessary burden by
7 of its members assembling to decide all sorts of
constitutional questions, no matter what their weight or
worth. Since Art. 13(3) (a) of the Constitution defines
"law" to include any Ordinance, Order, bye-law, rule, regu-
lation. notification etc. having the force of law, seven
Judges of this Court may have to sit for determining any and
every question as to the constitutional validity of even
orders and notifications issued by the Government, which
have the force of law. This will inevitably cause great
inconvenience and undue delay in disposal of cases. [720
C-D]
JUDGMENT
CIVIL APPELLATE JURISDICTION: C.A. No. 1810 of 1971.
(Appeal by Special Leave from the Judgment and Order dated
1.3.1971
of the Orissa High Court in O.J.C. No. 1597 of 1968)
AND
C.A. No. 1170 of 1972
(Appeal by Special Leave from the Judgment and Order
dated 8.3.1971 of the Orissa High Court in O.J.C. No. 316 of
1970)
AND
Civil Appeal No. 1981 of 1972
(Appeal by Special Leave from the Judgment and Order
dated 28.3-.1971 of the Orissa High Court in O.J.C. No. 1885
of 1968)
AND
Civil Appeal No. 1982 of 1972.
(Appeal by Special Leave from the Judgment and Order
dated 28.6.1971 of the Orissa High Court in O.J.C. No. 153
of 1971)
AND
Civil Appeal No. 1603 & 1604 of 1972
716
(Appeal by Special Leave from the Judgment and Order
dated 2.3.1971 of the Orissa High Court in O.J.C. Nos. 202
and 203 of 1969.)
A.K. Sen, Bishamber Lal Khanna and Bishamber Lal for
the appellants in CA No. 1810/71.
A.K. Sen, (CA No. 40/72) H.R. Gokhale (CAs 1603-1604)
Gobind Das (CAs 1170, 198, 1982, SLPs and for the interven-
ers) Bijoy Mohenty, Mrs. Sunanda Bhandare, M.S. Narsimhan,
A. K. Mathur, A.K. Sharma and Miss Malini Poduval for the
appellants in CA Nos. 1170, 1981-1982, 1603-1604 of 1972
and CA No. 40/72 and in the SLPs Nos. 305-310/72 and for
the Interveners.
G. Rath, Adv. General Orissa and G.S. Chatterjee and
R.K. Mehta for respondents in CAs 1810, 1170, 1981 1982,
1603-1604 and 40)
The Judgment of the court was delivered by
CHANDRACHUD, J---In 1959, the Orissa Legislature enacted
the Orissa Taxation (on Goods carried by Roads or Inland
Waterways) Act, 7 of 1959, the constitutionality of which
was challenged by the appellants on the ground that the Bill
leading to the Act was moved without the previous sanction
of the President of India, as required by the proviso to
Art. 304 of the Constitution. During the pendency of the
writ petitions filed by the appellants in the Orissa High
Court, the Orissa Legislature passed the Orissa Taxation (on
Goods carried by Roads or Inland Waterways) Validation Act,
18 of 1962, validating the Act of 1959. The High Court
accepted the appellants’ contention that the Act of 1959 was
unconstitutional but it dismissed the Writ petitions on
the ground that the appellants were not entitled to any
relief as they had not challenged the Act of 1962 which had
validated the Act of 1959. After the decision of the High
Court. respondent No. 2, the Tax Officer, assessed tax in
varying amounts for different quarters on the goods carried
by the appellants by road. The appellants then filed fresh
writ petitions under Art. 226 of the Constitution challeng-
ing the Act of 1962. Those petitions were dismissed by the
High Court but in appeal, the judgment of the High Court
was set aside by this Court on August 10, 1967. It was
held by this Court that the Validating Act of 1962 did not
cure the defect from which the Act of 1959 suffered and
therefore, respondents were not entitled to recover any tax
from the appellants under the aforesaid Acts.
On March 25, 1968 the Orissa Legislature, having ob-
tained the previous sanction of the President to the moving
of the Bill. passed the Orissa Taxation (on Goods carried by
Roads or Inland Waterways) Act, 8 of’ 1968, imposing the
same levy which it had unsuccessfully attempted to levy
under the Act of 1959 and to validate under the Act of 1962.
Some of the appellants from whom the State Government had
recovered taxes after the Act of 1962 was upheld by the High
Court asked for refund thereof after that Act was declared
unconstitutional by this Court. The refund having been
refused by the Governments, the appellants filed writ peti-
tions in the High Court
717
challenging the validity of the 1968 Act. The dismissal of
those writ petitions has given rise to these appeals by
special leave.
There is no substance in any of the contentions raised
on behalf of the appellants regarding the constitutionality
of the Act of 1968. The bill which matured into the impugned
Act was introduced by the Orissa Legislature after obtaining
the previous sanction of the President under the Proviso to
Art. 304 of the Constitution. As shown by the Preamble, the
Act was passed in order to provide for the level of tax on
certain goods carried by roads or inland waterways in the
State of Orissa and to validate certain taxes imposed on
such goods. By s. 1 (3), the Act was to be deemed to have
come into force on April 27, 1959 being the date on which
the Act of 1959 had come into force. Section 3 of the Act
which contains the charging provision provides that there
shall be levied a tax on goods of the description mentioned
in the section and carried by means specified therein.
Section 27 of the Act provides in so far as material that
notwithstanding the expiry of the Act of 1959 and notwith-
standing anything contained in any judgment, decree or order
of any Court, all assessments made, all taxes imposed or
realised, any liability incurred or any action taken under
the Act of 1959 shall be deemed to have been validly made,
imposed, realised, incurred or taken under the corresponding
provisions of the Act of 1968. These provisions of the Act
of 1968 show that what the State legislature did thereby was
to enact, with retrospective effect, a fresh piece of taxing
statute after complying with the constitutional mandate
contained in the proviso to Art. 304 that no Bill for the
purposes of clause (b) of the Article shall be introduced or
moved in the Legislature of a State without the previous
sanction of the President.
The reliance of the appellants on the judgment of this
Court in Jawaharmal v. State of Rajasthan(1) is wholly
misconceived. In that case, s. 4 of the impugned Act of
1964 in truth and substance provided that the failure to
comply with the constitutional mandate of Presidential
sanction shall no.t invalidate the Finance Acts of 1961 and
1962. It was held by this Court that it was not competent
to the legislature to pass an Act providing that an earlier
Act shall be deemed to be valid even though it did not
company with the requirements of the Constitution. In the
instant case, the State Legislature passed an independent
enactment in 1968 after complying with the constitutional
requirement but it gave to that enactment retrospetive
effect from the date that the 1959 Act had come into force
and it created a legal fiction, which was permissible for
it to do, that all actions taken under the Act of 1959 shall
be deemed to have been taken under the Act or 1968.
Mr. Gobind Das, appearing on behalf of some of the
appellants, raised points commonly associated with high
constitutional concepts, but lacking in substance. He urged
that the Act of 1968 is a piece of colourable legislation,
that it constitutes a flagrant encroachment on
(1) [1966] 1 S.C.R. 890
718
the functions of the judiciary and that since the Act has no
operation in futuro and operates only on the dead past, it
is void as lacking in legislative competence. Learned
counsel also employed the not unfamiliar phrase that the Act
is a fraud on the Constitution. Happily all’ of these
attacks, in so far as they at all require an answer,"can be
met effectively in a brief compass. In Khyerbari Tea Co.
Ltd. v. State of Assam(1), it was held by this Court that
Art. 304(b) of the Constitution does not require that laws
passed under it must always be prospective. Nor was it
correct to say that once the State Legislature passes an
Act without recourse to that Article and that Act is struck
down, the Legislature cannot re-enact, that Act under that
article and give it retrospective effect. The Court fur-
ther held in Khyerbari (supra) that the mere fact that a
validating taking statute has. retrospective operation does
not change the character of the tax’ nor can it justify the
Act being branded as a colourable piece of legislation in
any sense. We may only add that since it is well-settled
that the power to legislate carries with it the power to
legislate retrospectively as much as prospectively, the
circumstance that an enactment operates entirely in the past
and has no prospective life cannot effect the competence of
the legislature to pass the enactment, if it fails within
the list on which that competence can operate. As regards
the power to pass a validating Act, that power is essen-
tially subsidiary to the legislative competence to pass a
law under an appropriate: entry of the relevant list. Thus
the impugned enactment is a valid exercise of legislative
power and is in no sense a fraud on the Constitution.
As regards the alleged encroachment by the legislature
on fields judicial, the argument overlooks that the Act of
1968 does not, like the Act under consideration in Jawahar-
mal(2), declare that an invalid Act shall be deemed to be
valid. It cures the constitutional vice from which the Act
of 1959 suffered by obtaining the requisite sanction of
the President and thus armed, it imposes a new tax, though
with retrospective effect. Imposition of taxes or valida-
tion of action taken under void laws is not the function of
the judiciary and therefore, by taking these steps the
legislature cannot be accused of trespassing on the preserve
of the judiciary. Courts have to be vigilant to ensure
that the nice balance of power so thoughtfully conceived by
our Constitution is not allowed to be upset but the concern
for safeguarding the judicial power does not justify conjur-
ing up trespasses for invalidating laws. There is a large
volume of authority showing that if the vice from which an
enactment suffers is cured by due compliance with the legal
or constitutional requirements, the legislature has the’
competence to validate the enactment and such validation
does not constitute an encroachment on the functions of
the judiciary. The validity of a validating taxing law
depends upon whether the legislature possesses the compe-
tence over the subject-matter of the law, whether’ in making
the validation it has removed the defect from which the
earlier enactment suffered and whether it has made due and
adequate provision in the validating law for a valid imposi-
tion of the tax; ( See, for example Prithvi Cotton Mills v.
Broach Borough Municipality(3)
(1) [1964] 5 S.C.R. 975 (2) [1966] 1 S.C.R. 890.
(3) [1970]1 S.C.R. 388.
719
Tirath Ram Rajindra Nath v. State of U.P.(1); Government of
Andhra Pradesh v. Hindustan Machine Tools Ltd.(2). The
passage from Cooley’s ConstitutiOnal Limitations’ (Ed.
1927, Vol. I, p. 183) that a legislative act is a "pre-
determination of what the law shall be for the regulation of
all future cases falling under its provisions" does not bear
upon the power of the legislature to pass laws which are
exclusively retrospective. Mr. Gobind Das’s reliance on
that passage cannot therefore further his contention.
Mr. Gokhale, who appears on behalf of some of the appel-
lants, attempted to challenge the Act of 1968 on the ground
of unreasonableness but he did not pursue that argument.
But he made another point which requires some attention.
The appellants or some of them, did not challenge the
orders of assessment passed against them as the Acts of 1959
and 1962 were held unconstitutional. Counsel’s apprehen-
sion is that any appeal filed hereafter for challenging the
assesSment made under the earlier Acts would be barred by
limitation and the appellants would be deprived of their
statutory right to question the correctness of the assess-
ment. This apprehension is unfounded because the 2nd
proviso tO S. 12 of the Act of 1968 empowers the appropriate
authority to admit an appeal after the period of limitation
is over if it is satisfied that the dealer had sufficient
cause for not preferring the appeal within the said period.
Sub-section (3) confers on the Commissioner the power of
revision and sub-section (4) of s. 12 confers the power of
review subject to the rules made under the Act. We have no
doubt that if any appeal challenging. an order of assessment
is filed beyond the period of limitation and the authority
is satisfied that the appeal could not be filed within
limitation for the reason that the Acts of 1959 and 1962
were held to be unconstitutional, the delay in filing the
appeal would be condoned. We are equally confident that if
any appeal filed for challenging an order of assessment was
withdrawn or not pursued for the reason that the two Acts
were held unconstitutional, the authority concerned would
pass appropriate orders reviving the appeal. We are happy
to note the assurance of the learned Advocate-General of the
State of Orissa that the State will not oppose in such cases
the condonation of delay or the revival of appeals. For
these reasons we dismiss the appeals but there will be no
order as to costs. The Special Leave Petitions which were
kept pending to await the decision of these appeals are
hereby dismissed.
We may take this opportunity to dwell upon the incon-
venience resulting from the enactment of art. 144A which
was introduced by the 42nd Amendment to the Constitution.
That article reads thus:
"Special provisions as to disposal of ques-
tions relating to Constitutional validity of
laws.
(1) A.I.R. (1973) S.C. 405. [1975] Supp
S.C.R. 394.
720
"144A (1) The minimum number of Judges of the
Supreme Court who shall sit for the purpose of
determining any question as to the Constitu-
tional validity of any central law or State
law shall be seven.
(2) A Central law or a State law shall not be
declared to be constitutionally invalid by the
Supreme Court unless a majority of not less
than two-thirds of the Judges sitting for the
purposes of determining the question as to the
constitutional validity of such law hold it to
be constitutionally invalid.""
The points raised in these appeals undoubtedly involve the
determination of questions as to the constitutional validity
of a State law but they are so utterly devoid of substance
that Mr. Asoke Sen and Mr. Gokhale who appear for the appel-
lants could say nothing in support of their contentions
beyond barely stating them. Were it not for the valiant,
though vain, attempt of Mr. Gobind Das to pursue his points,
the appeals would have taken lesser time to dispose of than
for a Court of seven to assemble. Article 13(3)(a) of the
Constitution defines "law" to include any Ordinance, Order,
bye-law, rule, regulation, notification etc. having the
force of law with the result that seven judges of this Court
may have to sit for determining any and every question is
to the constitutional validity of even orders and notifica-
tions issued by the Government, which have the force of
law. A Court which has large arrears to contend with has
now to undertake an unnecessary burden by seven of its
members assembling to decide all sorts of constitutional
questions, no matter what their weight or worth. It is
hoped that Art. 144A will engage he prompt attention of the
Parliament so that it may, be general consensus, be so
amended as to leave to the Court itself the duty to decide
how large a Bench should decide any particular case.
S.R. Appeals dismissed.
721