Khyerbari Tea Co. Ltd. & ANR Vs. The State of Assam [1963] INSC 250 (13 December 1963)
13/12/1963 GAJENDRAGADKAR, P.B.
GAJENDRAGADKAR, P.B.
SARKAR, A.K.
WANCHOO, K.N.
GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA
CITATION: 1964 AIR 925 1964 SCR (5) 975
CITATOR INFO:
R 1970 SC 129 (10) E 1970 SC1864 (5) R 1971 SC1737 (47) RF 1972 SC1804 (11) F 1975 SC 583 (13) RF 1975 SC1443 (21) MV 1975 SC2065 (35,60) RF 1975 SC2299 (606) F 1976 SC 182 (18) R 1977 SC1686 (5) RF 1980 SC 898 (64) RF 1981 SC 463 (16,26,34) RF 1981 SC 991 (13) E&R 1982 SC 902 (19) MV 1982 SC1325 (31,32) R 1983 SC1155 (13,20,23,25) RF 1990 SC 313 (24) E 1990 SC 772 (1,3) RF 1990 SC 781 (13)
ACT:
Constitution of India, 1950, Arts. 301, 304(b) and Seventh Schedule, List II, Entry 56-Assam Taxation (on Goods carried by Road or on Inland Water-ways) Act (Assam Act X of 1961)Constitutional validity.
HEADNOTE:
This petition challenges the constitutional validity of the Assam Taxation (on Goods carried by Road or on Inland Waterways) Act, 1961. The previous Act of 1954 having been declared constitutionally invalid by this Court in Atiabari Tea Co. Ltd. v. State of Assam [1961] 1 S.C.R. 809, the Assam Legislature with the previous sanction of the President of India under Art. 304(b) of the Constitution, passed the impugned Act with retrospective effect from the date on which the Act of 1954 had been promulgated and its provisions were except for certain additional provisions substantially the same. The Assam High Court which was moved under Art. 226 of the Constitution held that the Act was constitutionally invalid. The State of Assam applied for and obtained certificates to appeal to this Court. The present petitioners moved this Court under Art. 32 of the Constitution. Since petitioner No. 1 was a company and as such its petition was incompetent, petitioner No. 2, the Manager of the company, was heard and some of the respondents in the appeals to be preferred by the State of Assam were allowed to intervene in the present proceedings.
The case of petitioner No. 2 was that the company exported tea grown and manufactured in its own garden from Goalpara in Jalpaiguri District to Calcutta. The booking station and the destination were both in West Bengal, the total distance between them being 689 miles of which only 1-1/2 to 2 miles of inland waterways lay in the State of Assam. The tea was carried by railway from Goalpara to Dhubrighat and thereafter by ferries on inland waterways and transhipped to steamers at the said Ghat. It was contended that ss. 3 and 34, which were the material provisions of the Act, were invalid and that the Assam Legislature was incompetent to enact the said provisions which constituted unreasonable restrictions on the freedom of trade guaranteed by Art. 301 and infringed Art. 19(1)(g) of the Constitution.
Held. (per Gajendragadkar, Wanchoo, Das Gupta and Ayyangar JJ.), As the impugned Act was not found to be compensatory by the High Court nor was it claimed to be so by the State the only question that fell to be decided in this petition was whether the restrictions imposed by the impugned Act were 976 reasonable and in the public interest within the meaning of Art. 304(b) of the Constitution.
Atiabari Tea Co. Ltd. v. State of Assam, [1961] 1 S.C.R. 809, and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, [1963] 1 S.C.R. 491, explained.
The entries in the three lists in the Seventh Schedule must be given the widest possible interpretation. Power conferred on the Legislature to levy tax must be widely construed so as to include the power to select the taxable articles, to fix the rates, to prescribe the machinery for recovery, to prevent evasion and to prescribe the procedure for determining the amount payable by any individual. It could not be assumed that Entry 56 of List II, in giving the Legislature the power to enact the impugned Act, required that the tax must be levied only against the owner of the goods that were carried or against persons who carried them,, If the tax was really levied on goods carried, the Legislature was free to prescribe the machinery for its recovery.
R.C. Jall v. Union of India. [1962] Supp. 3 S.C.R. 436, Sardar Baldev Singh v. Commissioner of Income-tax, Delhi & Ajmer. [1961) 1 S.C.R. 482 and Orient Paper. Mills Ltd. v. State of Orissa. [1962] 1 S.C.R. 549, referred to.
Section 3(1) of the impugned Act which imposed the tax and s. 3(2) which made the producer liable to pay it could not therefore be impugned on the ground of legislative incompetence.
M' Cullock v. Maryland, (1819)4 L. Ed. 579, considered.
But the machinery set up for recovery of the tax should have a rational connection with the tax. The absence of such a nexus between them would make the tax liable to attack as being unjustified under Entry 56.
Article 304(b), properly construed, does not require that laws passed under it must always be prospective. It was not correct to say that once the State Legislature passed an Act without recourse to that Article and it was struck down, it could not reenact that Act under the Article and give it retrospective effect. That Article contemplates restrictions and-not prohibitions and the rule that prohibitory legislation cannot have retrospective operation can have no application.
Punjab Province v. Daulat Singh., L.R. 73 I.A. 59, held inapplicable.
M.P. V. Sundararamier & Co. v. State of Andhra Pradesh [1958] S.C.R. 1422, applied.
M/s. West Ramanand Electric Distribution Co. Ltd. v. State of Madras. [1963] 2 S.C.R. 747, referred to.
Nor could it be said that a restrictive statute passed under Art. 304(b) with retrospective operation must necessarily defeat the scheme of Part XIII of the Constitution.
977 The mere fact that a validating taxing statute has retrospective operation does not necessarily change the character of the tax sought to be recovered by such retrospective operation. The proviso to s. 3(2) of the impugned Act was not retrospective in character and did not change the character of the tax.
Rai Ramkrishna v. State of Bihar [1964] 1 S.C.R. 897 referred to.
A law enacted under Art. 304(b) with the previous sanction of the President does not necessarily take away the jurisdiction of the Court to consider whether the restrictions imposed by it are reasonable and in the public interest. The observation in Atiabari Tea Co.'s case in this regard should not be taken as conclusive on the point.
Although there is a presumption in favour of the constitutionality of a statute, if it is proved that it invades fundamental rights under Art. 19(1), the onus shifts on to the State and it must justify its validity under Art.
19(6). Onus under Art. 304(b) is still more in favour of the citizen as it clearly purports to restrict the freedom of trade.
Saghir Ahmad v. State of U.P. [1955] 1 S.C.R. 707, applied.
Hamdard Dawakhana. (Wakf) Lal Kuan, Delhi v. Union of India.
(1960] 2 S.C.R. 671, referred to.
The impugned Act by making the producer liable for the tax under s. 3(2) proviso or by assessing the tax on a flat rate on weight instead of by the ton and mileage method, could not be said to have imposed unreasonable restrictions. The law of taxation is a balance of complex considerations and if the Legislature thought that a flat rate was just and fair to the tea trade as a whole no exception could be taken to it.
It was not correct to say that s. 34 of the impunged Act was discriminatory or infringed Art. 19(1) (g). It was not discriminatory in that it selectedonly tea and jute for taxation. The Legislature had full freedom to determine which articles it should tax, in what manner and at what rate.
Raja Jagannath Baksh Singh v. State of U.P. [1963] 1 S.C.R.
220 and East India Tobacco Co. v. State of Andhra Pradesh, [1963] 1 S.C.R. 404, referred to.
The power of this Court to strike down a taxing statute for contravention of Arts. 14, 19 or 301 must be exercised with circumspection. It is only in cases of such statutes as are clearly confiscatory in character that the power of this Court can be invoked or exercised.
K.T.Moopil Nair v. State of Kerala, [1963] 3 S.C.R. 77, referred to.
The impugned Act was not colourable legislation in any sense.The power of legislation carried with it the power to make the, law 1 SCI/64-62 978 retrospective And the passing of a validating Act is essentially subsidiary to that power conferred by the relevant legislative List.
Nor was the Act extra-territorial in its application.
Whether the goods are carried for a long or a short distance had no bearing on legislative competence under Entry 56 List 11 under which the impugned Act was enacted. Since the goods were carried, although over a very small part of inland waterways in Assam, the doctrine of nexus, applicable to such cases, was satisfied.
Tata Iron & Steel Co. Ltd. v. State of Bihar, [1958] S.C.R.
1355, referred to.
The word 'carried' in Entry 56, List 11 is of wider denotation than 'import' and the Act could not be impugned on the ground that the goods carried and taxed did not join the mass of goods in the State of Assam itself.
Central India Spinning and Weaving and Manufacturing Co. Ltd. v. Munkipal Committee, Wardha, [1958] S.C.R. 1102, held inapplicable.
The power to levy the tax conferred by Entry 56, List 11, was not controlled by the Tea Act, 1953, passed by the Parliament under List I. Nor was it correct to say that the River Boards Act, 1956, imposed a bar on the Assam Legislature to pass the impugned Act.
Per Sarkar, J.-Entries in the Legislative Lists have to be read in their widest amplitude. So read there could be no doubt that the Assam Legislature was competent under Entry 56 of List II to provide for the realisation of the tax in the manner most suitable to it. The words of the Entry were wide enough to enable the Legislature to realise the tax either from the producer, even though he did not carry it, or from the person who actually carried it.
Under the proviso to s. 3(2) of the Act, a notification could not be issued with retrospective effect. That proviso made the producer liable for realisation of the tax from the purchaser from the date appointed by the notification. If the notification appointed a past date, it would be incompetent.
It was not correct to say that a statute contemplated by Art. 304(b) cannot be retrospective. A legislature competent to pass a law can pass it with retrospective effect. If the flow of the trade could be restricted prospectively, it could be restricted retrospectively as well. The restrictions imposed by Art. 304(b) stand on the same footing as those under Art. 19(6).
There is no prohibition in Art. 304 and, therefore, it could not be said that it did not contemplate retrospective operation. It provides for reasonable restrictions on the freedom of trade and therefore permits and does not prohibit.
Punjab Province v. Daulat Singh L.R. 73 I.A. 59, held inapplicable.
979 Entry 56 of List II does not require that the tax imposed must be measured according to the distance they are carried.
A flat rate is not wanting in reasonableness. It would not be wrong to say that since a tax is collected in public interest and for public good the burden imposed by it on trade would prima facie be reasonable in the public interest.
The legislature has the power to pick, and choose the articles on which to impose the tax and such choosing cannot by itself amount to discrimination. The Act applies to all who are concerned with the carriage of tea and jute.
Raja Jagannath Baksh Singh v. State of Bihar, [1963] 1 S.C.R. 220, referred to.
Section 34 of the impugned Act did not violate Art. 14 of the Constitution, nor could it be said that it was a colourable legislation.
A validating Act, passed under the same legislative power under which the invalid Act was passed, would not amount to colourable legislation.
Gajapati Narayan Deo v. State of Orissa, [1954] S.C.R. 1, referred to.
Since the Assam Legislature had the power to impose the tax on carriage of goods, however short the distance over which they were carried, the impugned Act could not be said to be bad for extra-territoriality.
Quaere as to on whom the onus of proving the reasonableness of a restriction imposed by a statute on which its constitutionality depends lies.
ORIGINAL, JURISDICTION : Writ Petiton No. 134 of 1962.
Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights.
S.K. Niyogi and S.C. Mazumdar, for the petitioners.
B.C. Barua, Advocate-General, Assam, M.C. Setalvad, R.B. Datar and Naunit Lal, for the respondents.
G.S. Pathak, A.N. Sinha and B.N. Ghosh, for the interveners.
December 13, 1963. The Judgment of P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta and N. Rajagopala Ayyangar JJ.
was delivered by Gajendragadkar J. A. K. Sarkar J.
delivered a separate Opinion.
980 GAJENDRAGADKAR J.-The present writ petition by which the two petitioners Khyerbari Tea Co. Ltd., and M. Sudhir Chandra Guha, Manager of the said Company, seek to challenge the validity of the Assam ; Taxation (On Goods, Carried by Road or on Inland Waterways) Act, 1961 (No. 10 of 1961) (hereinafter called 'the Act'), is a sequel to the decision of this Court in the case of Atiabari Tea Co., Ltd. v. The State of Assam(1). To this petition have been impleaded three respondents, the State of Assam, the Commissioner of Taxes, the taxing authority appointed under s. 6 of the Act, and the Superintendent of Taxes, Dhubri Division. We will refer to the State of Assam as the respondent hereafter.
The respondent had, passed a similar Act No. 13 of 1954 which had received the assent of the Governor on the 9th April,, 1954. The validity of the said Act was challenged by the petitioners and certain other producers of tea by filing writ petitions before the Assam High Court. The Assam High Court dismissed the writ petitions and held that the impugned Act of 1954 was valid. The said judgment was pronounced by the High Court on the 6th of June, 1955. The petitioners whose writ petitions had been dismissed, then preferred appeals to this Court by special leave, and they also, moved this Court by writ petitions under Art. 32 of the Constitution. These matters were heard by this Court in the case of Atiabari Tea Co. Ltd.(1) and by its judgment delivered on the 26th September, 1960, the said impugned Act was struck down as being unconstitutional. Thereafter, the Act with which we are concerned in, 'the , present proceedings was passed by the Assam Assembly. It received the assent of the President on the 6th April, 1961. The relevant terms of the Act are, on the whole, substantially similar to the terms of the earlier Act which was struck down, The Act has made certain additional provisions to which we will refer later. The petitioners contend that the operative provisions of the Act are invalid, and so, they pray for issue of an appropriate writ (1) (1061] 1 S.C.R. 809.
981 or order directing the respondent not to enforce the operative provisions, against them. Petitioner No. 1 is a company and as such," it has no right to move this Court under Art. 32. This position is conceded by Mr. Mazumdar for the petitioners. Petitioner No. 2 who is the Manager of Petitioner No. 1 is, however, a citizen of India and as such, he is entitled to challenge the validity of the Act inasmuch as the respondent threatens to take action in pursuance of the material provisions of the Act' against the company of which he is the Manager. Mr. Setalvad does not dispute the right of petitioner No. 2 to move this Court by a petition under Art. 32.
After the Act was passed and it came into force, the question about the scope and effect of the provisions contained in Part XIII of the Constitution which had been dealt with by this Court in the case of Atiabari Tea Co.(1) came to be considered. by a larger Bench in the case of the Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan(2), and the decision of this larger Bench was -pronounced on the 9th April, 1962. Since the Act has been passed by the Assam Legislature with the previous sanction of the President directly as a result of the decision. of this Court in the case of Atiabari Tea Co, the present proceedings can be appropriately described as an after-math of the said decision.
It appears that 487 persons moved the Assam High Court by writ petitions under Art. 226 of the Constitution impeaching the validity of the Act. These writ petitions were considered by a Division Bench of the said High Court and they were allowed on the 1st August, 1963. The two learned Judges who constituted the Division Bench have delivered concurring judgments and held that,, the Act is invalid. On some of the points urged by the petitioners before them, the two learned Judges have differed, in the result, they agreed in taking the view operative provisions of the Act were unconstitutional. The respondent State of Assam then moved the High Court for certificates to enable it to come to this Court in appeal against the decision of the High Court in the said 487 writ petitions. The High Court has granted certificates, but the said appeals will take long to become ready; and so, 12 of the petitioners who are respondents in some of the said appeals were allowed to intervene in the present proceedings. In fact by arrangement between Mr.Mazumdar who appeared for the petitioners before us and Mr.pathak who represents the interveners, the principal argument has been urged before us by Mr. Pathak and we expressly told Mr. Pathak that since our decision on the present writ petition would govern the decision of the appeals which the respondent is going to bring to this Court against the decision of the Assam High Court, we would permit him to raise all points in support of the view taken by the Assam High Court and would not confine him to the points which have been taken by the petitioners in their petition before us. In fact, the Assam Judgments in question have been filed by the Interveners, and Mr. Pathak has invited our attention to the main findings recorded in those judgments. Normally, counsel for interveners is not allowed a right of reply, but having regard to the fact that Mr.Mazumdar requested us to allow Mr. Pathak to lead him in the present proceedings, we have allowed both Mr. Pathak and Mr. Mazumdar to open the case,, and have heard both of them in reply.
Petitioner No. 25 case is that petitioner No. 1, the company, carries on the business of manufacturers wholesale dealers and exporters of tea at Jalpaiguri in the State, of West Bengal. The business of the said garden is managed by petitioner No. 2 and is subject to the control and direction of the company. Naturally, the remuneration 'and prospects of petitioner-No. 2 depend upon the good and economical management and the prosperity of the business of the Company. The petition avers that at all material 983 times the company exported the tea grown and manufactured by it in its tea garden by Railway from Garopara Railway Station in the district of Jalpaiguri to the Calcutta port.
It is common ground that Calcutta Port is the principal tea market in the country for sale for consumption at home as well as for export overseas. According to the. petition, the tea was delivered packed in chests to the North Eastern Railway Administration at Garopara Rly. Station and the rate charged by the said Administration was paid to it for carrying the goods to Calcutta. It is clear that both the booking station and the station of destination are in the State of West Bengal. When the tea thus travels from Garopara to Calcutta, it hag to traverse a short distance of about 67 miles through Assam to Dhubri Ghat, on the bank of the River Brahmaputra. It appears that by an arrangement between the Railway and the I.G.N. and R.S.N. Co. Ltd. these goods. are taken over by ferries on inland waterways and' are transshipped to steamers at the said Ghat. The steamers ,hen carry the goods through the Brahmaputra in Assam up to Mankind; the distance between Dhubri Ghat and Mankachar is about 1 1/2 to 2 miles. In their journey, the steamers cover a distance of about 572 miles in Pakistan territory, and then they reach the Calcutta Port. The total distance covered by the journey of the goods is about 689 miles.
Petitioner No. 2 contends that the material provisions of the Act are invalid, because the Assam Legislature was not competent to enact the said provisions. It is also urged that the said provisions are unconstitutional because they constitute an unreasonable restriction on the freedom of trade guaranteed by Art. 301, as-well-as petitioner No. 2's run mental right guaranteed by Art. 19(1)(g) of the Constitution. The validity of the Act is also challenged on some other grounds which Would be dealt with later.
These pleas are denied by the respondent and it is urged on its behalf that the Act is constitutional, that it has been passed under Art. 304(b) after obtaining the previous sanction of the President; that its material provisions are in no sense unreasonable and that the restrictions imposed by them on the freedom of trade are reasonable restrictions and are required in the 'public interest. It is also alleged that the said restrictions are reasonable and in the interests of the general public and as such, they are saved by clause (6) of Art. 19.
Before dealing with these contentions, it is necessary to indicate at the outset the effect of the two judgments to which we have already referred. In the case of the Atiabari Tea Co. Ltd.(1), three views were expressed. Sinha C.J., held that the freedom conferred by Art. 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse. According to his view, the earlier Assam Act did not contravene Art. 301 and was valid. This view put a somewhat narrow construction on the scope and effect of the provisions contained in Art. 301.
Shah J., on the other hand, placed a very wide construction on the said provision and held that the freedom of trade guaranteed by the said Article included not only freedom from discriminative tariffs and trade barriers but also from all taxation on commercial intercourse. As such, he held that the said Act was unconstitutional.
The majority view was that the freedom of trade guaranteed by Art. 301 was wider than that contained in s.. 297 of the Government of India Act, 1935, which meant that taxes which directly and immediately impeded: the freedom of trade would come within the mischief of Art. 301. According to this view, Art. 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves; and if any Act imposes any direct restrictions on the movement of goods, (1) [1961] 1 S.C.R. 809.
985 it attracts the provisions of Art. 301. On the majority view, if the impugned tax imposes a restriction on the movement of trade, the Act could be sustained if it complied with the provisions of Art. 304(b). In regard to the Act with which the Court was then concerned, the majority judgment observed that it may be that one of the objects in passing the Act was to enable the State Government to raise money to keep its roads and waterways in repairs; but that object may and can be effectively achieved by adopting another course of legislation; if the said object is intended to be achieved by levying a tax on the carriage of goods, it can be so done only by satisfying the requirements of Art. 304(b).
In the Automobile Transport (Rajasthan) Ltd. case(1), the majority view expressed by Das J. on behalf of himself and Kapur & Sarkar JJ was that if a tax is compensatory in character, it cannot be said to fall within the mischief of Art. 301. According to this view, a clarificatory rider was added to the majority view expressed in the case of the Atiabari Tea Co. Ltd. (2) by providing that regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Art. 301, and such measures need not comply with the requirements of the provisions of Art. 304(b).
Subba Rao J., who delivered a separate judgment concurring with the conclusion reached by Das J., preferred to emphasise that taxing statutes which would escape the mischief of Art. 301 could be appropriately described as regulatory. He, therefore, held that the Rajasthan Motor Vehicles Taxation Act (No.11 of 1951) with which the Bench was dealing, was regulatory in character and as such, not unconstitutional. In other words, whereas Das, Kapur and Sarkar JJ., upheld the validity of the Act on the ground that it was either compensatory or regulatory, Subba Rao J., preferred to base his decision mainly on the ground that it was regulatory.
(1) [1963] 1 S.C.R. 491.
(2) [1961] 1 S.C.R. 809.
986 The minority view which has been expressed by Hidayatullah J., on behalf of himself and Ayyangar and Madholkar JJ., assumed that though regulatory taxing statutes may be said to fall outside Art.30,compensatory taxing statutes cannot make the same claim. According to this view, if a taxing statute was sought to be justified on the ground that the tax imposed by it was compensatory in character, that could be done only by adopting the procedure prescribed by Art.
304(b). It may be noticed that the scope of the regulatory statutes as discussed by Hidayatullah J., is much narrower than the scope of the regulatory statutes as considered by Subba Rao J.
In the result, the majority view expressed in the case of the Atiabari Tea Co.(1), was substantially accepted by the majority of the learned Judges constituting the larger Bench which heard the Automobile Transport (Rajasthan) Ltd. (2) case, but a corollary was added to the said view as we have just indicated.
The majority view in the Atiabari case("' proceeded on the basis that the Australian decisions which dealt with the scope and effect of s. 92 of the Australian Constitution would be of no assistance in constraing the effect of the provisions in part XIII of our Constitution, because the legislative, historical and political background, the structure and the effect of the relevant provisions contained in Part XIII were in material particulars different from those of s. 92 of the Australian Constitution; s. 92 is absolute in terms and on its literal construction, admits of no exceptions. The Australian decisions, therefore, had to introduce distinctions, such as compensatory or regulatory tax laws in order to take laws answering the said description out of the purview of s. 92.
In our Constitution, however, though Art. 301 is worded substantially in the same way as s. 92, Art. 302 and 304 provide for reasonable restrictions being imposed on the freedom of trade subject to the requirements of the said two Articles, and so, the problem facing judicial decisions in Australia and in this country (1)[1611] 1 S.C.R. 809.
(2) [1963] 1 S.C.R. 491.
987 in ragard to the freedom of trade and the restrictions which it may be permissible to impose on it, is not exactly the same. The minority view expressed by Hidayatullah J., has pointedly referred to this aspect of the matter. That, in brief, is the position of the two decisions of this Court in Atiabari Tea Co. Ltd.(1) and Automobile Transport (Rajasthan) Ltd. (2) cases respectively.
It would immediately be noticed that though the majority view in the Automobile Transport (Rajasthan) case(2) Substantially agreed with the majority decision in the case of Atiabari Tea Co.(1), there would be a clear difference between the said two views in relation to the scope and effect of the provisions of Art. 304 (b). According to the majority view in the case of Atiabari Tea Co., if an Act is passed under Art. 304(b) and its validity is impeached, then the State may seek, to justify the, Act on the ground that the restrictions imposed by it are reasonable and in the public interest, and in doing so, it may, for instance, rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan) (2) case, compensatory taxation would be outside Art. 301 and cannot therefore, fall under Art. 304(b). If in the present case it had been urged before us that the tax levied by the Act is compensatory in character, it would have been necessary to consider the question once again by constituting a larger Bench. It will be recalled that the Act with which we are concerned has been passed by the Assam Legislature directly as a result of the decision of this Court in Atiabari Tea Co.'s case(1); that decision was that if the tax imposed by the Act was compensatory in character then the Act could be sustained only if it was passed after complying with the provisions of Art. 30-4(b). The Assam Legislature has accordingly adopted the said procedure and passed the Act. If the Act had been compensatory in character, it would have become necessary for us to consider the (1) [1961] 1 S.C.R 809.
(2) [1963] 1 S.C.R. 491.
988 whole position once again, because it would obviously be unfair and unjust that the earlier Act should have been struck down though it was compensatory in character and in testing the validity of the present Act, it should be open to the petitioners to contend that its compensatory character is irrelevant to the enquiry under Art. 304(b).
In the present case, the Assam High Court which dealt with the 487 writ petitions has found that the Act is not compensatory, and Mr. Setalvad has not urged before us that the Act is in fact compensatory. That is why we are proceeding to deal with the merits of the dispute between the parties in the present case on that basis. The main question, therefore, would be that the tax imposed by the Act not being compensatory in character, are there any reasons to justify the respondent's contention that the restrictions imposed by it are reasonable and in the public interest? Let us then consider the broad features of the Act and its material provisions before dealing with the several points urged before us. The Act consists of 34 sections. As we have already noticed, the Bill was introduced after obtaining the previous sanction of the President, and the Act has been passed in accordance with the provisions of Art. 304(b). The preamble to the Act provides that the Act has been passed to provide for the levy of a tax on certain goods carried by road or on inland water-ways in the State of Assam and to validate certain taxes imposed on goods carried by road or on inland waterways and for certain other connected matters. Section 1(3) provides that the Act shall be deemed to have had effect as from the 24th April, 1954, and shall remain in force till the 31st March, 1962. In other words, the Act takes effect from the date when the earlier Act was to have taken effect, and its life continues for one year after it received the assent of the President and became effective. Section 2, inter alia, defines a producer as meaning "a producer of tea and includes the person in charge of the garden where tea is produced." The Act is concerned with 989 tea and jute, but in the present proceedings, we are dealing with the petitioners whose interest lies in tea. Section 3 of the Act deals with the liability to tax, and since its validity is seriously impugned by the petitioners, it is necessary to read it:
"(1) Subject to the provisions of this Act, there shall be levied a tax on (a) manufactured tea and (b) jute in bales carried by motor vehicle, , cart, trolley, boat, animal and human agency or any other means except railways and airways in such manner and in respect of such period and at such rate as specified in the Schedule.
(2) Such tax levied on manufactured tea shall be realised from the producer and that levied on jute shall be realised from the dealer;
Provided that where tea is sold at the factory premises, the producer shall be liable for realisation of tax from the purchaser with effect from such date as the Government may, by notification, appoint, for the carriage of such tea as provided in this section and the producer shall be liable for the payment of such tax notwithstanding the fact that the tea is not carried by the producer;
Provided further that no tax shall be levied under this Act on any jute or tea in respect of which such tax has already been paid." Section 4 provides that the tax shall be charged on the total net weight carried during a return period. Section 5 deals with the problem of determining the weight. Section 6 prescribes the taxing authorities. Section 7 requires the return to be submitted by the producer and makes appropriate provisions in that behalf. Section 8 deals with licensing;
s. 9 covers the problem of assessment and it provides that the Commissioner may, by an order in writing, assess the producer and determine the tax payable by him on the basis of his return. Section 10 deals with cancellation of assessment; s. 11 makes a provision 990 for assessment in cases of evasion and escape and authorises the Commissioner within two years of the expiry of the period in question to serve on the producer a notice requiring him to furnish a return, and empowers him to proceed to assess or reassess the producer as provided by it. Section 12 deals with rectification. Section 13 provides for penalty for non-submission of returns and evasion of taxes. Under s. 14 it is provided that assessment is no bar to prosecutions and penalties. Section 15 makes the tax payable by the representative of a deceased producer. Sections 16 and 17 deal with appeals and revision, while s. 18 prescribes for the computation of the period of limitation for the said two remedies. The notice of demand is provided for by s. 19, and the period when the tax is to be paid is laid down by s. 20. Section 22 prescribes the mode of recovery; s. 23 provides for refunds;
and s. 24 for employers' prosecution for failure to furnish returns. Section 25 provides that no court shall take cognizance of any offence under the Act or under the rules made under it, except with the previous sanction of the Commissioner. Section 26 permits composition of offenses.
Section 27 imposes an obligation on the producer to maintain and preserve account books; s. 28 confers power on appropriate authorities to require the production of accounts. Section 29 bars civil suits. Section 30 empowers the appropriate authority to take evidence; s. 31 deals with the delegation of powers; s. 32 confers power on the Government to make rules; s. 3 3 repeals the earlier Act of 1954 and s. 34 makes provisions by way of validation. Since this last section has also been challenged, it is necessary to read it:
"34. (1) Any rule made, any liability incurred, any tax levied or realised, any returns furnished, any proceedings commenced, any notification published, any action taken or anything whatsoever done under the provisions of the Act repealed, shall be deemed to have been made, incurred, levied, realised, furnished, commenced, 991 published, taken or done under the corresponding provisions of this Act.
(2) Notwithstanding anything contained in any judgment, decree or order of any court, all taxes imposed or realised or purporting to have been imposed or realised under the Act repealed shall for all purposes be deemed to be, and to have been, validly imposed or realised and accordingly(a) no suit or other proceeding shall be maintained or continued in any court against the Government or any person or authority whatsoever for the refund of any taxes so paid; and (b) no court shall enforce any decree or order directing the refund of any taxes so paid." The Schedule to the Act gives the rates for respective periods and these rates correspond to the rates prescribed by the earlier Act for the period covered by it and prescribes new rates for the period thereafter. Rules have been made under s. 32(1) and Forms prescribed for the making of returns. That, in brief, is the scheme of the Act.
It has been urged before us by Mr. Pathak that s. 3 which is the charging section, is outside the legislative competence of the Assam Legislature. The Act purports to have been passed by virtue of the legislative power conferred on the State Legislature under Entry 56 in List 11 of the Seventh Schedule. This Entry reads thus: "Taxes on goods and passengers carried by road or on inland waterways." It will be recalled that Entry 30 in List 1 deals with carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels, and so, Entry 56 in List II does not cover cases falling under Entry 30 in List 1. It is only in regard to goods and passengers carried by road or inland waterways that the State Legislature can pass a law imposing taxes. Mr. Pathak's contention is that s. 3 read with the proviso to sub-section (2) 992 clearly contemplates that the primary and the sole liability to pay the tax on tea has been placed on the producer even in cases where the tea in question may have been sold at the tea garden before it is carried. In other words, the contention is that in cases where tea is carried by the purchaser, it is only the purchaser of the tea which is carried who can be taxed, and since the producer is taxed even in such cases, the taxation itself is beyond the legislative competence of the State Legislature. This argument proceeds on the assumption that the proviso lends colour to the construction of s. 3(2). Section 3(1) is enacted in terms of Entry 56 and it purports to indicate what the taxable event is. Section 3(2) makes the producer liable to pay the tax and the proviso to s. 3(2) enables the -producer to recover the tax from the purchaser with effect from such date as the Government may, by notification, appoint; this date was notified as 1St May, 1961. It is clear that the proviso is prospective, but Mr. Pathak suggests that the proviso can be explained only on the basis that s. 3(2) includes cases where tea, has been sold by the producer before it is carried, and in that sense the producer has been made liable to pay the tax even in regard to tea which has been sold by him before it is carried.
On the other hand, Mr. Setalvad argues that s. 3(2) is confined to cases where the producer himself carries tea and his suggestion is that the proviso which has been added by the present Act and which was not included in the earlier Act seeks to make the purchaser liable to pay the tax in case tea which is carried has been purchased by him before it leaves the garden. He wants us to read the proviso as creating an obligation on the purchaser to pay the tax and as making the producer liable to recover the tax from the purchaser as the Agent of the State. In support of his argument that s. 3(2) cannot be read to include cases where tea has been sold before it is carried, Mr. Setalvad has referred us to the fact that when the corresponding provision in the earlier Act was construed by the Assam High Court, it was 993 held that where tea is sold before it is carried, the producer is not liable and no tax can be recovered from him, vide H. P. Barua v. State of Assam(1). He also emphasises the fact that the proviso is prospective in operation, and so, it indicates that it cannot lend colour to the construction of section 3(2).
It is, however, not easy to accept Mr. Setalvad's construction. The words used in the proviso show( that the producer has been made liable for realisation of the tax from the purchaser, but there are no words imposing a liability on the purchaser to pay the tax and no penalty is prescribed in case he fails to pay the tax to the producer.
The relevant forms prescribed for making returns, also continue to be the same as under the old Act and do not contemplate cases where the purchaser may have to make returns. In the present proceedings, we are not concerned with the case of any purchaser, and so, it is unnecessary for us to pronounce a definite opinion on the construction of s. 3. We would, therefore, proceed to deal with Mr.
Pathak's argument on the basis that s. 3(2) makes the producer liable even in. cases where tea has been sold by him to a purchaser before it is carried away from the garden.
This argument of legislative incompetence seems to assume that Entry 56 requires that the tax must be levied by the State legislature on goods which are carried only against the owner of the goods that are carried, or against the persons who carry them. We do not see any Justification for introducing such limitations in the said Entry. It is hardly necessary to emphasise that Entries in the three Lists in the Seventh Schedule which confer legislative competence on the respective Legislatures to deal with the topics covered by them must receive the widest possible interpretation; and so, it would be unreasonable to read in the Entry any limitation of the kind which Mr. Pathak's argument seems to postulate. Besides, it is well-settled that when a power is conferred on the Legislature to levy a tax, that power itself must (1)SCI.R. 1955 Assam 249.
1 SCI/64 --63 994 be widely construed; it must include the power to impose a tax and select the articles or commodities for the exercise of such power; it must likewise include the power to fix the rate and prescribe the machinery for the recovery of the tax. This power also gives jurisdiction to the Legislature to make such provisions as, in its opinion, would be necessary to prevent the evasion of the tax. In imposing taxes, the legislature can also appoint authorities for collecting taxes and may prescribe the procedure for determining the amount of taxes payable by any individual;
all these provisions are subsidiary to the main power to levy a tax and, therefore, once it is shown that the tax in question has been levied on goods carried, it would be open to the legislature to prescribe the machinery for recovering the said tax. As was observed by Chief Justice Marshall in M'Culloch v. Maryland(" "the power of taxing the people and their property is essential to the very existence of Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it". This statement of the law must, however, be read subject to the condition that even tax statutes have to satisfy the test of reasonableness prescribed by clause (6) of Art. 19, and the fundamental right of equality before law guaranteed by Art. 14 as well as the test prescribed by Art. 301.
Reverting then to s. 3(1), we ought to add that the said section in terms expressly makes the carriage of goods the taxable event, and s. 3(2) makes the producer liable to pay the tax only on goods carried. If the goods produced in the tea garden are not carried, there is no occasion to pay the tax. That being so, the fact that the Legislature has adopted the machinery of making the producer responsible for the payment of the tax and liable for it in that sense cannot introduce any element of legislative incompetence which would vitiate the statute.
It may be conceded that when the legislature constructs a machinery for the recovery of the taxes (1) [1819] 4 L. ed. 579, 607 995 which it is within its competence to impose, the said machinery should have some rational or intelligent connection with the tax. In the absence of a rational nexus between the producer and the tax on goods carried, it may be open to a citizen to contend that the tax is not one justified by Entry 56. But can we say that between the producer of tea and the tax which is levied on the tea carried from his garden, there is no rational nexus? Considerations of administrative convenience as well as considerations of facility in recovering the tax cannot be treated as irrelevant in this context. The tea which is taxed has been produced by the producer and even when he sells it to a purchaser, it is obvious that it would be carried away and not left with the producer, and so, the legislature may have thought that it would be appropriate to make the producer liable to pay the tax.
It may also be relevant to bear in mind that the cases of sale of tea before it is carried cannot be too many. As we have already seen, the earlier Act did not include the proviso and that seems to suggest that usually, it is the producers who produce the tea in their gardens and carry it to Calcutta either for sale, or for home consumption, or for export. In fact, the petitioners before us are producers who have carried their own product from their tea gardens to Calcutta, and we were told that amongst the 487 persons who moved the Assam High Court by their writ petitions, not one was a purchaser; everyone was a producer who carried his own goods. Apart from these facts, however, it is impossible to sustain the argument that it is not competent to the legislature to devise a proper and appropriate machinery to recover a tax which it is competent to the legislature to levy.
This question has been frequently considered by this Court and the power of the Legislature to create appropriate machinery to recover a tax, or to prevent the evasion of the payment of the tax has been consi996 stently recongised. In R. C. Jall v. Union of India(1) while dealing with the question about the power of the legislature to decide at what 'stage and from whom excise duty should be recovered, this Court held that subject always to the legislative competence of the taxing authority, the tax can be levied at a convenient stage so long as the character of the impost is not lost. The method of collection does not affect the essence of the duty but only relates to the machinery of collection for administrative convenience. While enunciating this principle, this Court, however, took the precaution of adding that "whether in a particular case the tax ceases to be in essence an excise duty and the rational connection between the duty and the person on whom it is imposed ceased to exist, is to be decided on a fair construction of the provisions of a particular Act".
In Sardar Baldel, Singh v. Commissioner of Income-tax, Delhi & Ajmer(2) , this Court was called upon to consider the validity of s. 23A of the Indian Income-tax Act, 1922. At the relevant time, the said section gave power to the appropriate authority to make an order that the undistributed portion of the assessable income of the company shall be deemed to have been distributed as dividends and provided that thereupon the proportionate share thereof of each shareholder shall be included in his income for assessment. The argument which was urged before this Court was that the Company and its shareholders are different persons and, therefore, s. 23A was invalid inasmuch as under entry 54 of List 1 a law could be passed imposing a tax on a person on his own income. This argument was, however, rejected because this Court took the view that the Entries in the Lists should be read in a very wide manner so as to include all subsidiary and ancillary matters. That is why Entry 54 was held to authorise not only the imposition of a tax, but also an enactment which prevents the tax being evaded.
(1) [1962] Supp. 3 S.R. 436.
(2) [1961] 1 S.C.R. 482.
997 Similarly, in the Orient Paper Mills Ltd. v. The State of Orissa(1), this Court has observed that the power to legislate with respect to a tax comprehends the power to impose the tax, to prescribe machinery for collecting the tax, to designate the officers by whom the liability may be enforced and to prescribe the authority, obligations and indemnity of those officers. Therefore, we do not think Mr.
Pathak is right in contending that merely because in a few cases where tea may be sold at the garden before it is carried, the producer is made liable to pay the tax, s. 3 itself is outside the legislative competence of the Assam Legislature.
Then, Mr. Pathak argues that the Act which has been passed under Art. 304(b) cannot act retrospectively. The argument is that when an Act is passed under Art. 304(b) after introducing the Bill with the previous sanction' of the President, it must always and in every case operate prospectively. The scheme of Part XIII according to Mr. Pathak, clearly shows that if the State Legislature wants to avail itself of the provisions of Art. 304(b), it cannot purport to pass an Act in the first instance without taking recourse to Art. 304(b) and if the said Act is struck down, then take recourse to the said Article and make the law retrospective. If the State Legislature makes a law without taking recourse to Art. 304(b) and the law is struck down, the matter must end there and the provisions of the said law cannot be revived by a subsequent law passed under Art.
304(b) by making its operation retrospective. If such a process is allowed, it would materially affect the significance and the validity of the provisions. contained in Art. 301; that is one aspect of the matter.
The other aspect of the argument is that a law passed under Art. 304(b) really imposes restrictions and so, the principle that a law creating prohibitions can operate only prospectively, must govern the present case. In support of this argument, Mr. Pathak has relied on the decision of the Privy Council (1) [1962] 1 S.C.R. 549.
998 in the case of Punjab Province v. Daulat Singh"'. In that case, the Privy Council had occasion to deal with s. 5 of the Punjab Alienation of Land Act (Indian Act XIII of 1900) considered in the light of the provisions of s. 298 of the Government of India Act, 1935. Section 298(2) provides that nothing in this section shall affect the operation of any law which (a) prohibits, either absolutely or subject' to exceptions, the sale or mortgage of agricultural land therein described. The Privy Council held that s. 5 of the impugned Act which created such a prohibition could not operate retrospectively because the word " prohibits" can only mean the forbidding of a transaction, and such a direction is appropriate only in respect of transactions to take place subsequently to the date of the direction, and cannot include an attempt to reopen or set aside transactions already completed, or to vacate titles already acquired. It would thus be seen that this decision turned essentially upon the use of the word "prohibits" in s. 298(2) , and so, it would be unreasonable to extend the said decision to the cases falling under Art. 304(b) particularly when the restriction imposed is not of such a character as to amount to prohibition.
A similar argument was in fact rejected by this Court in the case of M.P.V. Sundararamier & Co. v. The State of Andhra Pradesh(2). What was urged before this Court in that case was that the principle laid down by the Privy Council in the case of Punjab Province(1) should be extended to a law to which Art. 286(2) of the Constitution applied. In rejecting this contention this Court observed that the Privy Council's decision proceeded solely on the connotation of the word "prohibits" in s. 2982' of the Government of India Act, 1935, and can be of no assistance in the construction of Art. 286(2) wherein the word does not occur. What this Court has observed about Art. 286(2) as it formerly stood in the Constitution applies with greater force to Art. 304(b).
It is true that there are some provisions (1) 73 I. A. 59.
(2) [1958] S.C.R. 1422.
999 in the Constitution which prohibit retrospective legislation as, for instance, Art. 20(1) & (2) vide M/s West Ramnand Electric Distribution Co. Ltd. v. State of Madras(1). But Art. 304(b) cannot be construed to mean that a law passed under it must in every case be prospective. If a Statute is passed under Art. 304(b) retrospectively, its reasonableness may, of course, fall to be considered on the merits in a given case but that is not to say that in no case can a statute be passed under the sain Articles to operate retrospectively.
Then as to the argument about the scheme of Part XIII, we do not see how a statute passed under Art. 304(b) would always and necessarily defeat the said scheme if its provisions are made retrospective. It is not disputed by Mr. Pathak that a taxing statute can be passed retrospectively, and it is conceded that if such a statute is passed, it would not be possible for any person to challenge its validity on the ground that it affects the citizens' fundamental right under Art. 19(1)(g). If such a challenge is made, it would be easily met by the plea that a taxing statute, though retrospective in its operation. can be reasonable and in the public interest within the meaning of clause (6) of Art. 19.
Therefore, if a taxing statute can, in a given case, operate retrospectively and its validity cannot be successfully challenged under Art, 19, we do not see how a similar challenge could be sustained against a taxing statute which has been passed under Art. 304(b). The freedom of trade guaranteed by Art. 301 is no doubt of very great importance to the political and economic unity of the country; but the freedom guaranteed to the individual is no less important;
just as in the case of a challenge to the validity of a statute under Art. 19 the court has to consider whether the restrictions imposed by the statute are reasonable and in the interests of the general public, so in dealing with a challenge to the validity of a statute passed under Art.
304(b) the court has to consider whether the restrictions (1) [1963] 2 S.C.R.747p.761.
1000 imposed by it are reasonable and are required in the public interest. The impact of the restrictions on the individual's right has to be judged in one case, whereas the impact of the restrictions on the freedom of trade has to be judged in the other; but basically, it is the invasion of a guaranteed right whose validity is being examined in either case; and so, if the law can be retrospective in one case, there is no reason why it cannot be retrospective in the other. We are, therefore, satisfied that there is no substance in the plea raised by Mr. Pathak that the Act is invalid solely because it operates retrospectively.
It is then faintly suggested that the retrospective operation of s. 3, in substance, changes the character of the tax. The argument is that the proviso to s. 3(2) enables the producer to recover the tax from the purchaser in case the goods are sold to a purchaser before they are carried, whereas such a provision did not exist in the past and in that sense, the retrospective operation changes the character of the tax. We have already noticed that the proviso in question is not retrospective in operation, and so, this argument has to be tested by reference to the remaining portion of s. 3(2). Thus tested, it is difficult to accept it as sound. In this connection, we may refer to the recent decision of this Court in Rai Ramkrishna v. State of Bihar(1) where a similar plea was rejected and it was pointed out that this Court has consistently held that the mere fact that a validating statute operates retrospectively does not justify the contention that the character of the tax sought to be recovered by such retrospective operation is necessarily changed.
The next question to consider in dealing with the validity of the Act which has been passed under Art. 304(b) is the extent of the dispute that is justifiable in law. Art.
304(b) provides that notwithstanding anything in Art. 301 or Art. 303 the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce or (1) [1964] 1 S.C.R. 897.
1001 intercourse with or within that State as may be required in the public interest, provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. It would thus be clear that an Act passed under Art. 304(b) can be held to be valid if it is shown that the restrictions imposed by it are reasonable and in the public interest. It is true that before Bill is introduced in that behalf, the previous sanction of the President has been obtained; but that does not take away the jurisdiction of the Court to consider the question as to whether the Act passed with the previous sanction of the President satisfies the requirements of Art. 304(b). Since Art. 304(b) permits restrictions to be imposed on the freedom of trade, the Constitution has made it clear that the said restrictions can be sustained only if they are reasonable and are required in the public interest. This position is not disputed by Mr. Setalvad before us. It is true that in the case of Atiabari Tea Co.(1), whilst contrasting the provisions of Art. 302 with those of Art.
304(b) the majority judgment has observed that prima facie the requirement of public interest may be said to have been satisfied by the previous sanction of the President and it is only the reasonableness of the restrictions which may fall to be considered in proceedings before the Court.
However,, this point did not directly arise for the decision of the Court, and so, those observations should not be read as definitely expressing the opinion that the requirement of public interest does not become the subject-matter of adjudication in proceedings before the Court when the validity of an Act passed under Art. 304(b) is questioned.
That takes us to the question about the onus of proof in these proceedings. It may be that in most cases, the question about the onus of proof would turn out to be merely of academic. importance, because when one considers the reasonableness of a given (1) [1961] 1 S.C.R. 809 1002 restriction, one inevitably enquires also whether the said restriction is not unreasonable; but since the point about the onus has been argued before us, it is necessary that we should deal with it. Mr.Setalvad contends that in dealing with the question about the constitutionality of any statute, we must draw an initial presumption in favour of the constitutionality of the statute, and he suggests that this initial presumption will cover even the requirement that the restriction must be reasonable and in the public interest as required by Art. 304(b). The same argument has been urged by him in regard to the presumption in so far as the petitioners' fundamental right under Art. 19 (1)(g) is concerned. He urges that in determining the content of the individual's fundamental right under Art. 19(1)(g), we must take into account Art. 19(1)(g) as well as the limitations placed on it by clause (6) of Art. 19. The fundamental right to carry on the trade is not an absolute right; it can be regulated and controlled by law which imposes restrictions on the said right, provided they said restrictions are reasonable and in the interests of the general public, and so, the contention is that when we speak about the initial presumption of constitutionality, it means that the court should assume that the restrictions imposed by the statute are reasonable and in the interests of the general public, unless the contrary is shown.
On the other hand, Mr. Pathak strenuously argues that the initial presumption would be rebutted as soon as it is shown that the fundamental right under Art. 19(1)(g ) is invaded by a statute, or the freedom of trade guaranteed by Art. 301 is assaulted by the impugned statute. Once a citizen shows that the impugned statute invades either his individual fundamental right, or the right of freedom of trade, the presumption has worked itself out and the onus shifts to the State to show that the invasion amounts to a restriction which is reasonable, or it is in the interests of the general public.
It may be conceded that, prima facie, there is some force in the argument raised before us by Mr.
1003 Setalvad. If the freedom guaranteed to an individual citizen is not absolute and its content must be determined by reading Art. 19(1)(g) and clause (6) of Art. 19 together, it can perhaps be said that the initial presumption cannot be rebutted merely by showing that the freedom under Art.
19(1)(g) has, prima facie, been invaded. But we do not think it necessary to pursue this matter any further, because we are satisfied that the question raised by Mr. Setalvad is concluded against him by a decision of this Court.
In Saghir Ahmad v. The State of U.P.(1) where this Court was dealing with the invasion of the citizens' fundamental right under Art. 19(1)(g), it has been observed that when the enactment on the face of it is found to violate a fundamental right guaranteed under Art. 19(1)(g), it must be held to be invalid, unless those who support the legislation can bring it within the purview of the exception laid down in clause (6) of Art. 19. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conducive to the welfare of the community. It is true that on several occasions, this Court has generally observed that a presumption of constitutionality arises where a statute is impeached as being unconstitutional, but as has been held in the case of Saghir Ahmad(1) in regard to the fundamental right under Art. 19(1)(g) as soon as the invasion of the right is proved, it is for the State to prove its case that the impugned legislation falls within clause (6) of Art. 19.
The position may be different when we are dealing with Art.
14, because under that Article the initial presumption of constitutionality may have a larger sway inasmuch as it may place the burden on the petitioner to show that the impugned law denied equality before the law, or equal protection of the laws. We may in this connection refer to the observations made by this Court in the case of Hamdard (1) [1955] 1. S.C.R. 707, 726.
1004 Dawakhana (Wakf) Lal Kuan, Delhi v. Union of India(1).
Another principle which has to be borne in mind in examining the constitutionality of a statute, it was observed, is that it must be assumed that the legislature understands and appreciates the needs of the people and the laws it enacts are directed to problems which are made manifest by experience and that the elected representatives assembled in a legislature enact laws which they