JUDGMENT Bhaskaran, Ag. C.J. 1. The Judgment of the Court was delivered by M. P. Menon, J.-The main challenge in these writ petitions is to the validity of the Kerala Motor Vehicles Taxation (Amendment) Ordinance, 1983 (Ordinance 1/1983), subsequently replaced by Kerala Act 6/83. A few of the petitions also impugn certain orders passed/endorsements made by the Taxation Officers, irrespective of the question of such validity. 2. The Kerala Motor Vehicles Taxation Act, 1976 was brought into force from 1st October 1975. S.3(1) of the Act imposed a tax on every motor vehicles used or kept for use in the State, at the rates specified in the schedule. S.3(2) provided for increase of these fates by notification in the Gazette, subject to a maximum of fifty per cent. S.4(1) required payment of the tax in advance by way of a quarterly or annual licence to be taken out by the registered owner of the vehicle. S.4(3) required the Taxation Officers to record in the certificates of registration, appropriate entries regarding payment of tax and clearance of liability. S.12 provided for payment of "additional tax" (penalty) in cases where the tax remained unpaid within the period prescribed. S.26 empowered the Taxation Officers to bring to tax, after notice to the owners, any portion of the tax which "escaped assessment". The other provisions of the statute are not material for the present purposes. 3. Under the schedule, the rate of tax payable in respect of vehicles permitted to ply as contract carriages and to carry more than 6 passengers was Rs. 100 per passenger for quarter. The corresponding rate for stage carriages was Rs. 70 per passenger; and by a notification under S.3(2), this rate was raised to Rs. 100 per passenger from 1st April 1976. The impugned amendment (Ordinance 1/83 and Act 6/83) increased the rate for contract carriages from Rs. 100 to Rs. 200, and the rate for stage carriages from Rs. 100 to Rs. 120, with retrospective effect from 1st January 1982. The complaint of the petitioners is that this steep increase, and that too with retrospective effect, is an unreasonable restriction on their right to carry on their trade or business. In the case of contract carriages, in particular, the rate of enhancement is one hundred per cent. 100 to Rs. 120, with retrospective effect from 1st January 1982. The complaint of the petitioners is that this steep increase, and that too with retrospective effect, is an unreasonable restriction on their right to carry on their trade or business. In the case of contract carriages, in particular, the rate of enhancement is one hundred per cent. Coupled with retrospectivity, the heavy doze of taxation makes it impossible for them to exercise their fundamental right under Art.19(1)(g) of the Constitution. The specific grounds raised are:- (i) Even the prospective operation of the Statute imposes an unreasonable burden on the operators, destroying their rights under Art.19(1)(g); (ii) At any rate, the retrospective part of the Statute is confiscatory and amounts to colourable exercise of legislative power; (iii) So far as contract carriage operators are concerned, there is discrimination between them and stage carriage operators, as the rates of enhancement are different and there is no justification for the different treatment; (iv) Discrimination also arises from the circumstance that tax rates are not increased in respect of goods vehicles; (v) S.3 of the Principal Act does not contemplate retrospective, enhancement of tax rates and in the guise of amending the Schedule, such a result cannot be achieved; and (vi) The State has been imposing vehicles tax prospectively only, and it is therefore estopped from enforcing a retrospective measure. 4. Before examining these contentions one by one, it is necessary to have some idea about the character of vehicles tax. It is no doubt a tax and therefore a compulsory exaction for augmenting the revenues of the State; all the same, it is a compensatory tax in the sense that the taxpayer is directly benefited by the proper up-keep and maintenance of the roads used by his vehicles. The concept of a compensatory tax was evolved by our Supreme Court in Automobile Transport Ltd. v. State of Rajastan and others ( AIR 1962 SC 1406 ) after referring to Australian and other decisions, to answer a contention raised by operators of vehicles that a tax on vehicles would hinder the freedom of trade, commerce and intercourse guaranteed by Art.301 of our Constitution. The court held that vehicles tax is compensatory and regulatory in nature, and rather than restricting freedom of trade and commerce, it facilitates their free flow and development. The court held that vehicles tax is compensatory and regulatory in nature, and rather than restricting freedom of trade and commerce, it facilitates their free flow and development. The tax is "a charge for a convenience or service provided by the State", imposed upon those who choose to avail themselves of the service or convenience. A "working test" for deciding whether a tax is compensatory or not was also evolved by pointing out that when the users of the facilities are not charged "patently much more'' than what is required for providing the facilities, the tax could be treated as compensatory. In the initial stages, the service rendered by the state by way of compensation was supposed to consist of maintaining the roads in good condition; but slowly, by a series of decisions, other facilities were also added to the list. Thus, in C. K. Krishnan v. State of Tamil Nadu and another ( AIR 1975 SC 583 ), Mathew, J. noticed the approach made by American courts where the cost for construction of new roads, enforcing traffic regulations, administering Police Regulations and the like were also being treated as part of the cost of the service rendered by the State. The theory of compensation was also extended to taxation of pass angers and goods, as distinct from vehicles taxation, in International Tourist Corporation v. State of Haryana ( AIR 1981 SC 794 ). In Khyerbari Tea Co. Ltd. v. State of Assam ( AIR 1964 SC 925 ) the Supreme Court had also found "considerable force" in the contention that a tax raised and utilised for keeping the waterways and roads in good condition could pass muster as a reasonable restriction on the freedom guaranteed by Art.301. 5. As the compensatory character of the tax will have some relation to the contentions raised on behalf of the petitioners, it is also necessary to notice the justification attempted by the State, in the two counter affidavits sworn to on its behalf, for enhancing the rates with retrospective effect. Consequent on a hike in diesel prices from June, 1980 the State permitted an increase in passenger fares by a Notification issued on 11th August 1980. These rates were further revised by another Notification dated, 1st December 1981. Consequent on a hike in diesel prices from June, 1980 the State permitted an increase in passenger fares by a Notification issued on 11th August 1980. These rates were further revised by another Notification dated, 1st December 1981. The stage carriage operators thus got the benefit of two fare revisions before 1st January 1982, and these higher rates were fixed so as to take in a higher rate of tax also. As for contract carriages, fares were never fixed; but it was reasonable to suppose that they too had been demanding and receiving higher rates from their customers during the periods in question, consequent on increase in operation costs. The proposal to enhance the rates of tax was drawn up on 19th August 1981 and the Government of India was addressed immediately for obtaining the President's sanction for issue of an Amending Ordinance. The President approved the measure in February, 1982 but before further action could be taken by the State Government, President's rule was introduced in the State. As fresh election to the Legislative Assembly was to be held in May, 1982 it was thought advisable to wait for a popular ministry to take charge. Soon after such a ministry was formed, a decision was taken on 28th June 1982 to introduce a Bill in the Assembly, and the Government of India was again addressed for obtaining President's sanction for introduction of the Bill. The "concurrence" was obtained on 25th August 1982, but before the Bill could be introduced, the Assembly was prorogued on 26th August 1982. Steps had then to be taken to draw up an Ordinance and this measure received Presidential sanction only on 21st December 1982. That was how the Ordinance came to be issued on 5th January 1983 with retrospective effect from 1st January 1982. So far as contract carriages were concerned, there was no revision of the rate of tax after 1975, though the cost of maintaining roads had been steadily increasing. Tax rates for stage carriages were increased in 1976, but still the funds were not sufficient. In 1978, the tax rates for motor cabs were increased by 50 per cent by notification under S.3(2) of the Act. During the year 1980-81, gross receipts under vehicles tax was 20.25 crores of rupees. After deducting administrative charges and contributions to Local Bodies, the amount available was Rs. In 1978, the tax rates for motor cabs were increased by 50 per cent by notification under S.3(2) of the Act. During the year 1980-81, gross receipts under vehicles tax was 20.25 crores of rupees. After deducting administrative charges and contributions to Local Bodies, the amount available was Rs. 18.55 crores; and from out of this, Rs. 13.72 crores were spent on "repairs etc." of roads. For 1981-82, the amount available after deduction was Rs. 19.83 crores, and the expenditure was Rs. 21.64 crores. The corresponding figures for 1982-83 were Rs. 23.79 crores and 25.99 crores respectively. The anticipated receipts for 1983-84 are Rs. 25 crores, and the budgeted expenditure was Rs. 24.14 crores. The Chief Engineer had however submitted a revised estimate for Rs. 38.13 crores and the actual will thus be above Rs. 24.14 crores as originally estimated. The number of contract carriages in the State has been steadily increasing from 1041 in 1980-81 to 1992 in 1983-84, and this itself is an indication that the business has all along been attractive. About 400 contract carriages were registered even after the enhancement of the rates of tax. 6. The points relating to the validity of the Act were argued before us only by counsel representing contract carriage operators. The stage carriage operators must probably have realised that their case was weaker, for at least two reasons: (i) they were permitted to collect higher fares from 1980 and 1981 and (ii). the percentage of increase in their case was lower. It has however to be stated that they did not specifically withdraw the challenge, apparently hoping that if the contract carriage operators succeed, they too could reap the benefit. 7. We may straightaway say that the first point relating to the unreasonableness of the levy, even in its prospective application, does not appeal to us. In the case of stage carriage operators, the enhanced levy is accompanied by an upward revision of the fares, and no facts and figures have been furnished on their behalf to show that they will in any manner be affected by the increase in the rates of tax. As regards contract carriage operators, only two petitioners have attempted to show how the levy would actually affect them. As regards contract carriage operators, only two petitioners have attempted to show how the levy would actually affect them. The particulars so furnished will be examined separately in connection with point No. (ii); it is enough to notice for the present that the two specific cases cannot be assumed to represent a fair cross section of the industry. The reasonableness of a levy cannot be tested merely by one or two examples; at least a sizeable section of the class should be brought into the judicial focus to contend that the taxing measure is so oppressive as to drive them out of business. That has not been done. There is no fare-fixation in respect of contract carriages, and one can assume that for the future at least, the operators will be able to pass on to their customers much more than what will be extracted from them. Between 1980-81 and 1982-83, the liability of the State in connection with the maintenance cost of the roads had increased from Rs. 13.72 crores to Rs. 25.99 crores i.e. almost hundred per cent. The Chief Engineer's revised estimate for 1983-84 is Rs. 38.13 crores. Keeping in mind that there was no increase in the tax rate from 1975, it is reasonable to think that a 100 per cent increase in the tax burden is more than compensated by the increased expenditure incurred by the State for maintenance of the roads during the period. As pointed out by the Supreme Court in the Khyerbari case ( AIR 1964 SC 925 ) a taxing Statute can be attacked on the ground of violating Art.14 and 19, but the jurisdiction of the court in this regard: "has to be exercised with circumspection, bearing in mind that the power of the State to levy taxes for the purposes of governance and for carrying out its welfare activities is a necessary attribute of sovereignty and in that sense, it is a power of a paramount character." Even the raising of general revenue by the State is for a public purpose; and the element of public good, and therefore of reasonableness, should necessarily loom larger where a substantial portion of the proceeds of the tax is spent for facilitating movement of goods and passengers, so essential for the welfare of the community. In The Corporation of Calcutta v. Liberty Cinema ( AIR 1965 SC 1107 ) the Supreme Court upheld enhancement of licence fee for cinemas from Rs. 400 a year to Rs. 6,000 a year. In Jagannath Baksh Singh v. State of U.P. ( AIR 1962 SC 1563 ) the court indicated that once legislative competence is conceded, a taxing statute could not be struck down on the ground that the rate is too heavy, except in those limited cases where the impost is confiscatory in nature or amounts to colourable exercise of power. And in Rai Ramakrishna v. State of Bihar ( AIR 1963 SC 1667 ) the court said: "It is, of course, true that the power of taxing the people and their property is an essential attribute of the Government, and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes Art.19, courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, courts would be justified in striking down the impugned statute as unconstitutional. In such cases, the character of the material provisions of the impugned statute is such that the court would feel justified in taking the view that, in substance, the taxing statute is a cloak adopted by the Legislature for achieving its confiscatory purposes." Courts have thus been recognising that the "exigencies of its needs" may sometimes compel the State to resort to severe dozes of taxation, and that the severity of the measure cannot be the sole criterion for pronouncing on their validity. We are therefore unable to uphold the first point raised by the petitioners. 8. Points (iii) and (iv) relating to discrimination can also be easily disposed of in the light of the decisions in G. K. Krishnan v. State of Tamil Nadu ( AIR 1975 SC 583 ), Malwa Bus Service v. State of Punjab ( AIR 1983 SC 634 ) and Meenakshi v. State of Karnataka ( AIR 1983 SC 1283 ). The question in the first case was whether enhancement of tax from Rs. 30 to Rs. 100 per seat per quarter was valid, and whether the distinction made between contract carriages and stage carriages in the matter of the levy was violative of Art.14. Both the contentions were rejected; and in regard to the plea of discrimination, the court took note of the following averments in the State's counter affidavit: "Commercial vehicles consist of public transport passenger buses namely stage carriages and contract carriages and goods vehicles namely, trucks of varying capacity. The tax on lorries is graduated, based on the permitted laden weight, the higher the laden weight, the higher the amount of tax. So far as the passenger buses are concerned the stage carriages cannot do unlimited mileage. But contract carriages, depending upon the organisational efficiency, can do much more distance of travel per day as there is flexibility of space and time for its operation. The stage carriages have to operate only on fixed time schedules and on fixed routes and the number of miles they can negotiate is limited by the rule to 250 miles. Besides, they can operate only on roads duly certified by the concerned authorities as fit for such operation. On the other hand, in the case of contract carriages, there is neither any fixed time schedule nor any fixed route; the number of mile they can run is also quite unlimited; they are free to operate on any route whether the road is certified as fit for such traffic or not. On the other hand, in the case of contract carriages, there is neither any fixed time schedule nor any fixed route; the number of mile they can run is also quite unlimited; they are free to operate on any route whether the road is certified as fit for such traffic or not. Hence the contract carriages can run a larger number of miles than stage carriages and therefore the wear and tear of the road (caused would be greater and in the case of roads) which are not fit for such operation, the damage to the road surface due to wear and tear is quite likely to be much larger, involving higher cost of maintenance of such roads; in other words, the contract carriage even with the same passenger seating capacity as a stage carriage can travel on any road and on any type of surface at any time of the day or night, and thus can cause greater damage to roads, especially of the inferior type of road surfaces which it traverses. The higher speed of vehicle will induce correspondingly higher impact stresses on the pavement structure than the vehicle of the same capacity at lower speeds. These higher stresses in the pavement layers affect the performance characteristics and durability of the surface. Also, higher speeds require longer accelerating and decelerating distances which brings in the maximum value of the frictional coefficient causing increased wear and tear of the road surfaces." In the second case, imposition of different rates of tax on stage carriages and public carriers was upheld in the following terms: "The next submission urged on behalf of the petitioners is based on Art.14 of the Constitution. It is contended by the petitioners that the Act by levying Rs. 35,000 as the annual tax on a motor vehicle used as a stage carriage but only Rs. 1,500 per year on a motor vehicle used as a goods carrier suffers from the vice of hostile discrimination and is, therefore, liable to be struck down. There is no dispute that even a fiscal legislation is subject to Art.14 of the Constitution. But it is well settled that a legislature in order to tax some need not tax all. It can adopt a reasonable classification of persons and things in imposing tax liabilities. There is no dispute that even a fiscal legislation is subject to Art.14 of the Constitution. But it is well settled that a legislature in order to tax some need not tax all. It can adopt a reasonable classification of persons and things in imposing tax liabilities. A law of taxation cannot be termed as being discriminatory because different rates of taxation are prescribed in respect of different items, provided it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere fact that a tax falls more heavily on certain goods or persons may not result in its invalidity. As observed by this Court in Khandige Sham Bhat v. The Agricultural Income Tax Officer [ (1963)3 SCR 809 ; ( AIR 1963 SC 591 )] in respect of taxation laws, the power of legislature to classify goods, things or persons are necessarily wide and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways. The courts lean more readily in favour of upholding the constitutionality of a taxing law in view of the complexities involved in the social and economic life of the community. It is one of the duties of a modern legislature to utilise the measures of taxation introduced by it f or the purpose of achieving maximum social good and one has to trust the wisdom of the legislature in this regard. Unless the fiscal law in question is manifestly discriminatory the court should refrain from striking it down on the ground of discrimination. These are some of the broad principles laid down by this Court in several of its decisions and it is unnecessary to burden this judgment with citations. Applying these principle it is seen that stage carriages which travel on an average about 260 kilometres every day on a specified route or routes with an almost assured quantum of traffic which invariably is overcrowded belong to a class distinct and separate from public carriers which carry goods on undefined routes. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. The amount of wear and tear caused to the roads by any class of motor vehicles may not always be a determining factor in classifying motor vehicles for purposes of taxation. The reasons given by this Court in G.K. Krishnan's case AIR 1975 SC 583 (supra) for upholding the classification made between stage carriages and contract carriages both of which are engaged in carrying passengers are not relevant to the case of a classification made between stage carriage. which carry passengers and public carriers which transport goods. The petitioners have not placed before the Court sufficient material to hold that the impugned levy suffers from the vice of discrimination on the above ground." The distinction between passenger transport and goods transport was highlighted in the third case, with the following observations:- "................ in the matter of taxation the rate of tax and the objects to be taxed are to be determined by the Legislature and unless it is found to be so unreasonable, the Court would not interfere with the latitude enjoyed by the Legislature in this behalf. Now when a passenger tax is raised, the individual passenger may have to pay the same as and when there is upward revision of fare structure. But when tax on goods vehicles is raised the incidence of enhanced tax would fall on consumers of commodities transported. The transported goods may comprise essential commodities like foodgrains, sugar, fuel and the common man would have to pay the higher price. Further even in the matter of taxation, goods vehicles and passenger vehicles, even on account of use of the same road would not form the same class, and no statistical information was supplied to the Court as to the degree of wear and tear inflicted by the goods vehicles passing over roads than by the use of the road by the passenger vehicles. In the absence of this factual information, it is difficult to entertain the contention of the petitioners and the same must be negatived." The position is in no way different here, factually or otherwise, and points (iii) and (iv) have therefore to be rejected. 9. Point (v) based on S.3 of the 1.976 Act is also without substance. In the absence of this factual information, it is difficult to entertain the contention of the petitioners and the same must be negatived." The position is in no way different here, factually or otherwise, and points (iii) and (iv) have therefore to be rejected. 9. Point (v) based on S.3 of the 1.976 Act is also without substance. It is true that S.3(2) of the Act did not (or does not) contemplate enhancement of tax with retrospective effect by means of a notification. That is precisely one of the reasons why the legislature had to go in for an Amending Act. The mere existance of a provision in the principal Act for prospective enhancement by notification cannot take away or effect the competence of the legislature to enact another law providing for retrospectivity. The effect of S.3(2) was not to surrender the normal legislative power for ever; the object of the former was to enhance tax prospectively, without resort to fresh legislation, and not to fetter future exercise of legislative power which admittedly includes a power to legislate retrospectively. Enhancement of tax by notification under S.3(2) pertains to the realm of delegated legislation, and conferment of a specific power on a delegate cannot involve a total abdication of all powers by the principal. 10. Equally untenable is point (vi) based on principles of estoppel. Even with all the modern development in the law of promissory estoppel, it has been clearly recognised that such estoppels cannot be of any avail against clear legislative policy, much less against pleanary powers of legislation. If the executive cannot surrender its responsibilities to the public by making representations to certain people, the legislature cannot also do so. The power conferred on the State legislature by Art.246, read with the Entries in Lists II and III of the Seventh Schedules to the Constitution, cannot rest on what impression the executive Government might have given to operators of vehicles or other classes of people, in regard to its future policies. Principles of estoppel can never be effective barriers against exercise of paramount or plenary power by the legislative agencies of the State. 11. That leaves for consideration only point No. (ii), that is, confiscation and colourable exercise of legislative power in so far as the petitioners are called upon to pay the higher rate of tax for a period of one year before 1st January 1983. 12. 11. That leaves for consideration only point No. (ii), that is, confiscation and colourable exercise of legislative power in so far as the petitioners are called upon to pay the higher rate of tax for a period of one year before 1st January 1983. 12. The doctrine of colourable legislation is a check on legislative attempts to operate in unauthorised fields while ostensibly remaining in authorised fields. Where a legislature enacts a law for all outward purposes on a subject which is within its competence, but the law turns out to be really on a subject outside its competence, the covert attempt to overstep the constitutional limits is said to be colourable. Such overstepping of the limits may occur when the principles of separation of powers are violated, or when other constitutional inhibitions like those relating to guaranteed rights are overlooked. Trespass into prohibited fields in the guise of exercising ancillary powers may also have the same result. Thus, a taxing statute was struck down in K. T. Moopil Nair v. State of Kerala ( AIR 1961 SC 552 ) when it is found that it imposed unreasonable restrictions on the fundamental rights of citizens, conferred unbridled power on the executive and introduced dangerous elements of discrimination. The attempt to take a whole in return for the half was dubbed as confiscatory and colourable in Bihar v. Kameshwar Singh ( AIR 1952 SC 252 ). In Indira Nehru Gandhi v. Raj Narayan ( AIR 1975 SC 2299 ) the attempt to exercise constituent power in substitution of judicial power was condemned by the court. The colourable and confiscatory natures of a piece of legislation are in a sense two sides of the same coin; in practical terms at least, it is a variant of the method of exercising power granted for one purpose, for an all together different purpose. If you have power to legislate on a subject, and if you exercise that power for reaching at another subject forbidden to you, that will be a fraud on the constitution. If you have the power to tax, by all means tax; but in the guise of taxing, you cannot confiscate, or destroy other entrenched fundamental rights, because that will be overstepping your boundaries. Viewed in this perspective, all questions relating to colourable legislation coverage on the question of competence; the motive or the intention will not actually be relevant. If you have the power to tax, by all means tax; but in the guise of taxing, you cannot confiscate, or destroy other entrenched fundamental rights, because that will be overstepping your boundaries. Viewed in this perspective, all questions relating to colourable legislation coverage on the question of competence; the motive or the intention will not actually be relevant. That is why speaking about Government orders issued under the Madras Vehicles Taxation Act, Mathew J. said in G.K. Krishnan v. State of Tamil Nadu ( AIR 1975 SC 583 ). "As the State legislature was competent to pass the Act and as the Government is authorised under S.4 to levy the tax, the question of the motive with which the tax was imposed is immaterial. To put it differently, there can be no plea of a colourable exercise of power to tax if the Government had power to impose the tax and the fact that the imposition of the tax was for the purpose of eliminating competition would not detract from its validity. If an authority has power to impose a tax, the fact that it gave a wrong reason for exercising the power would not derogate from the validity of the tax. Therefore, there is no substance in the first contention." 13. The petitioners contend that having taken a decision in August, 1981 to enhance the fate of tax, the State Government need not have waited till January, 1983 to give effect to it retrospectively from 1st January 1982 unless the intention was to prevent the contract carriage operators from passing over the burden to the customers by enhancing the fares. We cannot, in this context, overlook the averments in the counter affidavit which explain how the delay was occasioned. The need to obtain presidential sanction which ordinarily takes time, the dissolution of the Legislative Assembly, and the reluctance of the Governor's regime to go ahead with a fiscal measure when elections were in the offing, are circumstances which are not irrelevant, even if motives and circumstances are relevant. That apart, it is settled law that retrospectivity alone cannot alter the character of a levy and make it colourable; if the levy is within the competence of the legislature, it can be made retrospective without offending known principles of constitutional law. That apart, it is settled law that retrospectivity alone cannot alter the character of a levy and make it colourable; if the levy is within the competence of the legislature, it can be made retrospective without offending known principles of constitutional law. In Tata Iron and Steel Company v. State of Bihar ( AIR 1958 SC 452 ) the Supreme Court had turned down a contention that retrospective operation of a sales tax levy was unconstitutional for the reason that the tax was an indirect one and that collection of the same with retrospective effect from the seller, under circumstances in which he could not pass it over" to the purchaser, would make it an impermissible impost on the seller himself. Similar objections against retrospective levy of sales tax were rejected in Sundararamier v. State of Andhra Pradesh (AIR 1958 SC 458) and in J.K. Jute Mills Co. v. State of U.P ( AIR 1961 SC 1534 ) also. The court took the same stand in the case of excise levy, in C. J. Patel v. Union of India ( AIR 1962 SC 1006 ). And in Rai Ramakrishna ( AIR 1963 SC 1667 ) where the tax involved was a tax on passengers and goods which the operators were entitled to pass over, the court pointedly said that the incidence of the tax could not be confused with the machinery for its collection, and that the mere failure of the machinery in respect of past transactions could not alter the character of the levy or affect its validity. In the Khyerbari Tea Co, case (1964 SC 925) the taxing event was the carriage of tea by roads and inland waterways, and the legislative provision was to collect it from the producer of the tea. The contention that the producer would be liable to pay tax for the goods sold at the point of production itself without any transport or carriage, and that the relevant legislative entry was not intended to tax the producer himself, was not upheld. Viewed in the background of this judicial history, the plea that the operators had no opportunity to pass on the tax to the customers, where the tax itself is not a direct impost on the customer, but one squarely falling on the operator, cannot be accepted. 14. It is then said that there was a surplus of Rs. Viewed in the background of this judicial history, the plea that the operators had no opportunity to pass on the tax to the customers, where the tax itself is not a direct impost on the customer, but one squarely falling on the operator, cannot be accepted. 14. It is then said that there was a surplus of Rs. 5 crores in 1980-81, and that a hundred per cent increase from 1st January 1982 cannot be justified as a compensatory measure. This is to overlook the fact that there was a deficit of Rs. 1.81 crores in 1981-82 and that the increase could have operated only for three months in that financial year. Further, the compensatory nature of a tax is not to be evaluated by a meticulous balancing of receipts and disbursements, and that too for a year or two. It was clear, at least by the latter part of 1981-82, that the State was in need of more funds for rendering the service in question; the position had become more acute by 1982-83. It is not disputed, and it cannot be disputed, that the expenditure on roads had risen from 13.72 crores in 1980-81 to 25.99 crores in 1982-83. Compensation was thus clearly afforded. As Mathew, J. had observed in Krishnan's Case ( AIR 1975 SC 583 ) once a proper purpose is established, the State should be given "considerable discretion" in the method, measurement and amount of tax, and that "rough approximation, rather than mathematical accuracy" is all that is required. Establishment of a separate fund, or express allocation of money for maintenance of roads is not necessary in such cases. In the Malwa Bus Service Case ( AIR 1983 SC 634 ) the Supreme Court said: "Courts cannot insist upon an exact correlation between the tax recovered and the costs so incurred because such exact correlation is in the very nature of things impossible to attain. There may be in some cases a little excess recovery by way of taxes.......... A comparison between the total revenue from taxation on motor vehicles and the expenditure incurred on providing facilities such as roads and bridges etc., in a single year may sometimes present a distorted picture..... There may be in some cases a little excess recovery by way of taxes.......... A comparison between the total revenue from taxation on motor vehicles and the expenditure incurred on providing facilities such as roads and bridges etc., in a single year may sometimes present a distorted picture..... " And in Meenakshi v. State of Karnataka ( AIR 1983 SC 1283 ) receipts from tax were much in excess of the amounts spent on roads for three consecutive years, and still the levy was. held to be compensatory, and not colourable or exproprietary. After observing that all that was necessary to uphold a regulatory and compensatory tax was the existence of a specific, identifiable object behind the levy, and a nexus between the subject and the object of the levy, their Lordships even considered the theoretical possibility of increased taxation operating as the proverbial last straw on the camel's back so as to totally discourage registration of new contract carriage vehicles, and said: "It was then urged that at any rate, the revenue collected by the enhanced tax is disproportionately higher than what is required to be spent on maintenance and construction of roads and other facilities connected with free flow of traffic both goods and passengers. Mr. Santhi Bhusan submitted that the impact of tax is so high that there is gradual reduction in the number of passenger vehicles applying for registration in the State of Karnataka. A chart was submitted for our perusal showing the gradual fall in registration of new passenger vehicles. Statistics have either the tendency to provide window-dressing or if not meticulously analysed, they have the tendency to mislead. A question was posed whether when optimum number of passenger vehicles are plying on the roads by the increase in number of vehicles from year to year, would it not be possible for diminishing return. After all there will be a direct correlation between the travelling public and the availability of vehicles and capacity of the roads for to and fro movement of vehicles before a saturation is reached. Once the optimum number is reached, further competition may be uneconomic or the authority for the safety of travelling public may not grant more permits. Unless passenger survey is undertaken which would show that more passengers are available and proportionately the number of vehicles have not increased, this chart submitted by Mr. Once the optimum number is reached, further competition may be uneconomic or the authority for the safety of travelling public may not grant more permits. Unless passenger survey is undertaken which would show that more passengers are available and proportionately the number of vehicles have not increased, this chart submitted by Mr. Shanti Bhushan has little to inform or teach us and throws no light on the vexed question under discussion. No useful inference can be drawn from this incomplete information." A tax on vehicles is primarily a tax, albeit compensatory, and not a fee; and even with regard to a fee, where the traditional view required quid pro quo and correlation, the approach is now different. In Sreenivasa General Traders v. State of A. P. ( AIR 1983 SC 1246 ) the Supreme Court said: - "The power of any legislature to levy a fee is conditioned by the fact that it must be 'by and large' a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a 'reasonable relationship' between the levy of the fee and the services rendered." "............ A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realized that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditure for rendering the service is not by itself decisive." There is therefore no substance in the petitioners' contention that retrospectivity in the instant case, arising either from the time taken for issue of Ordinance 1/1983, or from the circumstance that the decision to enhance the rate was taken at a time when there was some surplus in the road maintenance funds, is itself sufficient to spell out colourable exercise of legislative power. 15. 15. To show how retrospectivity for even one year would wipe out all the profits of the operators, the petitioners in O. P. No. 1059/83 have produced their Balance Sheet and Profit and Loss account for the year ended 31st March 1982; and going by the figures furnished, the partnership had made only a profit of Rs. 96,770 while the annual requirement for enhanced tax (seven contract carriages) would be around Rs.1.40 lakhs. It is however necessary to notice that the share capital is only Rs. 60,000 and the profit is arrived at after providing Rs. 19,800 for repairs of a car and Rs. 40,000 as "mess expenses" over and above Rs. 70,000 towards salaries, allowances and bonus, and Rs. 3.78 lakhs towards depreciation. Compared with the share capital, the rate of profit was very high; and taking into account 1981-82 alone, the impact of the tax increase would only be around Rs. 35,000 for the last quarter. For the year 1982-83, customer charges could be adjusted at least in the last quarter. Taking an overall view of the matter, we are unable to hold that the petitioners in the Original Petition would find it impossible to carry on their business because of the retrospective effect. The only other petition where an attempt has been made to furnish some figures is in O. P. No. 755/83, and those furnished are only estimates for the future without any reference to the actual impact on past profitability. As pointed out by this Court in Mayilvahanam Motor v. State of Kerala ( 1972 KLT 564 ) what is required to be shown is that the majority or at least a sizeable section of the operators would have to "give up" their business by reason of retrospective taxation, if an attack based on Art.19(1)(g) is to succeed. No such attempt has been made by the contract carriage operators, as a class, in the present case. In Rai Ramakrishna ( AIR 1963 SC 1667 ) the Supreme Court had noticed Sutherland's view that: "If the retroactive feature of a law is arbitrary and burdensome, the statute will not be sustained. The reasonableness of each retroactive tax statute will depend on the circumstances of each case. A statute retroactively imposing a tax on income earned between the adoption of an amendment making income taxes legal and the passage of the Income Tax Act is not unreasonable. The reasonableness of each retroactive tax statute will depend on the circumstances of each case. A statute retroactively imposing a tax on income earned between the adoption of an amendment making income taxes legal and the passage of the Income Tax Act is not unreasonable. Likewise, an income tax not retroactive beyond the year of its passage is clearly valid. The longest period of retroactivity yet sustained has been three years. In general, income taxes are valid although retroactive, if they affect prior but recent transactions." but had added that a mechanical test based on length of time alone was inappropriate. The retrospectivity there was for about eleven years, though the enactment was a validating enactment. Still, that does not detract from the position that even income tax enactments could be validly passed with retrospective effect. What matters is the actual impact on the business or trade taken as a whole, and not merely the period involved or the profitability of one or two engaged in the trade of business. 16. We are therefore of the view that the impugned legislative measure is valid, and cannot be successfully challenged on any or all the grounds urged by the petitioners. 17. Some of the operators have raised a point that the Amending Act provides no machinery for reopening assessments completed under the principal Act, even if the amendment is assumed to be valid. Reference is made to S.4 of the 1976 Act which requires payment of tax in advance, the taking out of licences and the making of entries in the registration certificates about clearance of tax dues. The petitioners had paid the entire tax due in 1982 under such completed assessments; and in the absence of some provision in the Amending Act for reopening those assessments, no demand for additional amounts can be made, it is contended. This overlooks S.26 of the Principal Act and the circumstance that Act 6/83 is only amendatory in nature. The petitioners had paid the entire tax due in 1982 under such completed assessments; and in the absence of some provision in the Amending Act for reopening those assessments, no demand for additional amounts can be made, it is contended. This overlooks S.26 of the Principal Act and the circumstance that Act 6/83 is only amendatory in nature. S.26 of the 1976 Act reads:- "If, for any reason the whole or any portion of the tax which would have been payable in respect of any motor vehicle under the Kerala Motor Vehicles Taxation Act, 1963 (24 of 1963) or under the Kerala Motor Vehicles (Taxation of Passengers and Goods) Act, 1963 (25 of 1963) or under this Act for any period has escaped assessment, the Taxation Officer may, at any time within, but not beyond, ten years from the expiry of that period, assess the tax which has escaped assessment after issuing a notice to the registered owner or the person having possession or control of the motor vehicle and making such inquiry as he may consider necessary." Tax "payable under this Act" in the above section would include tax payable under the Schedule, as amended by Act 6/83. And the expression "any portion of the tax" indicates that reopening is contemplated even when licences are issued and entries made in the registration certificates under S.4. "Escaped assessment", in the context, cannot be equated to a case of non assessment, as was done by the Madras High Court in S. L. A. Society v. Madras Corporation (AIR 1951 Madras 725), where the statutory provision considered was entirely different. Where any portion of the tax payable under the Schedule remains unpaid -- and this includes the Schedule as amended from time to time - the Taxation Officer can make an assessment or reassessment after notice to parties and due enquiry, subject to the period of limitation prescribed. The section thus provides a machinery for reopening assessments completed before the introduction of the Amending Act. 18. The petitioners however seem to be on firmer grounds as regards imposition of penalty under S.12, for non payment of arrears within seven days of the endorsements made by the Taxation Officers under R.5. The said rule is expressly made under S.4(1) of the Act, which requires payment. "In advance within such period and in such manner as may be prescribed". The said rule is expressly made under S.4(1) of the Act, which requires payment. "In advance within such period and in such manner as may be prescribed". The power under this section is only to prescribe a period within which payment is to be made in advance and not the period within which arrears are to be paid. R.5(5) relates to balance tax becoming payable due to enhancement of rate of tax. Assuming that this part of the rule is within the scope of S.4(1), the enhancement contemplated could only be a prospective enhancement by notification under S.3(2), and not a retrospective increase in the rate by subsequent legislation. Sub-sections (4) and (5) of S.4 and even R.9 of the Rules show that the statutory scheme is for payment in advance, coupled with display of evidence of such payment. Such prescriptions can have no relevance in the matter of payment of balance amounts or arrears determined under S.26. Once it is realised that S.26 is the only provision for reopening liabilities settled under S.4, the liability of the operators to pay the arrears in a case like the present could arise only after notice and reassessment under S.26, which may probably take the form of endorsements in the registration certificates. But there could be no question of insisting on payment and imposing penalty for default, without such notice. In other words, no penalty under S.12 could be imposed for non payment within the time specified in R.5(5). 19. Another point relates to demands for payment of tax at contract carriage rates, in respect of stage carriages covered for short periods by "special permits" granted under S.63(6) of the Motor Vehicles Act, 1939. To appreciate the point in issue, it is necessary to notice the provision of sub-sections (1) and (6) of S.63, and they are therefore extracted below:- "63. To appreciate the point in issue, it is necessary to notice the provision of sub-sections (1) and (6) of S.63, and they are therefore extracted below:- "63. Validation of permits f or use outside region in which granted.-(1) Except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been counter signed by the Regional Transport Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless counter signed by the State Transport Authority of that other State or by the Regional Transport Authority concerned: * * * * * * (6) Notwithstanding anything contained in sub-S.(1), but subject to any rules that may be made under this Act, the Regional Transport Authority of any one region may, for the convenience of the public, grant a special permit in relation to a public service vehicle for carrying a passenger or passengers for hire or reward under a contract, express or implied, for the use of the vehicle as a whole without stopping to pick up or set down along the line of route passengers not included in the contract, and in every case where such special permit is granted, the Regional Transport Authority shall assign to the vehicle, for display thereon, a special distinguishing mark in the form and manner specified by the Central Government and such special permit shall be valid in any other region or State without the counter signature of the Regional Transport Authority of the other region or of the State Transport Authority of the other State, as the case may be." Sub-S.(1) stipulates that a permit granted by one R.T.A. will not be valid in the region of another R.T.A, unless counter signed by that Authority. Sub-S.(6) engrafts an exemption to this rule by providing that no such counter signature will be required when a special permit is issued in relation to a public service vehicle for carrying passengers under a contract for use of the vehicle without stopping to pick up or set down passengers not included in the contract. Under S.2(25) of the Act, a public service vehicle may be a contract carriage or a stage carriage. Under S.2(25) of the Act, a public service vehicle may be a contract carriage or a stage carriage. Going by the definition of 'contract carriage' in S.2(3), S.63(6) enables an R.T.A. to issue a special permit to a stage carriage also to operate as a contract carriage for some time. But does such a vehicle become a contract carriage for the purposes of the Taxation Act? We think not. S.42 of the Motor Vehicles Act postulates the requirement of a permit for every 'transport vehicle'. S.46, 49, 52 and 55 deal with permits for stage carriages, contract carriages, private carriers and public carriers. The permit contemplated under" S.63(6) is a different kind of permit which could be granted both to contract carriages and stage carriages, but the grant of such permit does not alter the class or character of the vehicle either for the purposes of S.22, 24 and 32 of the Motor Vehicles Act, of for the purposes of the Taxation Act. S.2(m) of which provides that words and expressions used therein shall have the same meaning as in the Motor Vehicles Act. The Taxation Act only adopts the classifications of the Motor Vehicles Act; and under the Motor Vehicles Act, there is no separate classification for a contract carriage or stage carriage to which a special permit under S.63(6) is attached. The Schedule to the Taxation Act also enumerates the "classes of vehicles" for the purpose of taxation, and these also do not include a separate class covered by permits under S.63(6) of the Motor Vehicles Act. What is more, entry 4(i) of the Schedule speaks of "vehicles permitted to ply solely as contract carriages": a stage carriage which obtains a special permit for a few days under S.63(6) is not a vehicle solely permitted to ply as a contract carriage for a quarter, in order to justify demand of quarterly tax at the rate of Rs. 200 per passenger, as has been attempted by the Taxation Officers. Imposition of tax on such vehicles under Entry 4(i)(d) of the Schedule cannot therefore be sustained. 20. In the result, we hold that Ordinance 1/83 replaced by Act 6/83 is valid, and that the State is entitled to claim the higher rates of tax both prospectively and retrospectively as specified therein. Imposition of tax on such vehicles under Entry 4(i)(d) of the Schedule cannot therefore be sustained. 20. In the result, we hold that Ordinance 1/83 replaced by Act 6/83 is valid, and that the State is entitled to claim the higher rates of tax both prospectively and retrospectively as specified therein. We also hold that the Taxation Officers cannot impose penalty ('additional tax') on the operators under S.12 for non payment of arrears due before 1st January 1983 at the enhanced rates, without following the procedure in S.26, and that grant of short-term special permits under S.63(6) of the Motor Vehicles Act in relation to stage carriages cannot justify demand of tax from their owners at contract carriage rates; all notices issued, demands served or endorsements made under these two heads will therefore stand quashed. The operators who are in arrears of tax payable up to 31st December 1982 will also be allowed to pay off the amounts in two equal instalments, the first to be paid within three months from today, and the second, within three months thereafter. The Original Petitions are disposed of as above, with no order as to costs.