JUDGMENT V.K. Mehrotra, J —The challenge in this bunch of petitions under Article 226 of the Constitution is to the amendments brought about in the Himachal Pradesh Passengers and Goods Taxation Act, 1955 (for short, the Act) and the rules framed thereunder (hereafter the rules), after the decision of this Court in CW.P. No. 536 of 1990, Nurpur Private Bus Operators and others v. State of Himachal Pradesh and others, connected with several other writ petitions. The decision was rendered by a Division Bench on December 24, 1990. It is reported in 1992 (I) Simla Law Cases 117. 2. The scheme of the Act, as revealed by its various provisions, is akin to similar Acts in force in different States in the country. We may notice only those provisions which are material for a decision of the controversy involved in these petitions. 3. Section 3 is the charging section. Section 4 deals with the method of collection of tax, while section 5 relates to the method of levy. 4. Immediately before the decision aforesaid was given by this Court, these provisions, in their relevant part, read thus 5 "3. Levy of tax. — (1) There shall be levied, charged and paid to the State Government a tax on all fares and freights in respect of all passengers carried and goods transported by motor vehicles at such rates not exceeding..............as the Government may, by notification, direct.............. Explanation —When passengers are carried and goods are transported by a motor vehicle, and no fare or freight whether chargeable or not has been charged the tax shall be levied and paid as if such passengers were carried or goods transported at the normal rate prevalent on the route. (2) Where any fare or freight charged is a lump sum paid by a person on account of a season ticket or as subscription or contribution for any privilege, right or facility which is combined with the right of such person being carried or his goods transported by a motor vehicle, without any further payment or at a reduced charge, the tax shall be levied on the amount of such lump sum or on such amount as appears to the prescribed authority to be fair and equitable having regard to the fare or freight fixed by a competent authority under the Motor Vehicles Act, 1939. (3) Where passengers are carried............by a motor vehicle......................to any place within the State...............the tax shall be payable in respect of the distance covered within the State at the rate laid down in sub-section (1) and shall be calculated on such amount as bears the same proportion to the total fare and freight as the distance covered in the State bears to the total distance of the journey. 4. Method of collection of tax.—The tax shall be collected by the owner of the motor vehicle and paid to the State Government in the prescribed manner: Provided that in case of public carriers or private carriers the Government may accept a lump sum in lieu of the tax chargeable on freight in the manner prescribed. Provided further that in case of contract carnages the Government may accept a lump sum in lieu of the tax chargeable on fare in the manner prescribed. 5. Method of levy.—(1) Save as otherwise provided by this Act no passenger shall be allowed to travel by the owner In a motor vehicle unless he is issued a ticket in the prescribed form for the journey, noting that the tax has been paid : Provided that.................. (2)..................................." The amendment in the aforesaid provisions was brought in by the Himachal Pradesh Passengers and Goods Taxation (Amendment) Act, 1991. After the amendment, the provisions, in their relevant part, are in the following form i Section 3. (No substantial amendment). Section 4. "The tax..............shall be collected by the owner of the motor vehicle and paid to the State Government in the prescribed manner: Provided that................. Provided further that in case of motor vehicles (including the stage or contract carriages), other than those specified in the first proviso, in which the passengers are carried, the State Government may assess the tax...............at lump sum, in the manner prescribed, taking into consideration the registered capacity of the vehicle and the distance travelled or to be travelled by such motor vehicles under a permit issued to such vehicles." Section 5. (Not amended). The rule which requires to be noticed by us is Rule 9. (Not amended). The rule which requires to be noticed by us is Rule 9. The amendments have been brought about in the rules by the Himachal Pradesh Passengers and Goods Taxation (Amendment) Rules, 1990, which had been in force with effect from October 1, 1990, before being amended by the Himachal Pradesh Passengers and Goods Taxation (Amendment) Rules, 1991, which came into force from October 1, 1991. Originally, under Rule 9, the method of payment of tax was one of the following: “(i) By stamping the ticket or receipt with an impressed, embossed, engraved or adhesive stamp (not already used) issued by the State Government for the purposes of the Act and denoting that the tax due has been paid. (ii) Where the impressed, embossed, engraved or adhesive stamps are not available......................the amount of tax payable shall be deposited by the owner in cash into the Treasury…………." 5. After the amendment in the year 1990, the mode of payment of tax provided for in Rule 9 (1) was in respect of lump sum tax which was to be determined in the manner laid down in the rule. Amongst other things, the payment was to be made by the owner of a stage carriage of tax in lump sum to be determined by the assessing authority on the basis of the formula mentioned in the rules. The formula was this f "Number of seats x number of scheduled kilometers x 3/4* x rate of passengers tax x fare per kilometer: *Explanation.—In this formula 3/4 represents average occupancy taken at 75 per cent, of number of seats:” 6. Sub-rule (2) of Rule 9 provided that the assessing authority shall follow the procedure mentioned in the sub-rule for determining the lump sum tax under sub-rule (1). 7. After the amendment in the year 199!, Rule 9 (1) was modified by substituting the figures 3/5 and ‘60’ in place of figures ‘3/4 and ‘75’. With the other amendments in this rule, we are not concerned. 8. The petitioners in all these writ petitions are owners/operators of stage carnages plying their vehicles after obtaining route permits from the Regional Transport Authority in the State of Himachal Pradesh under the provisions of the Motor Vehicles Act. Normally passengers are carried in their vehicles. 9. With the other amendments in this rule, we are not concerned. 8. The petitioners in all these writ petitions are owners/operators of stage carnages plying their vehicles after obtaining route permits from the Regional Transport Authority in the State of Himachal Pradesh under the provisions of the Motor Vehicles Act. Normally passengers are carried in their vehicles. 9. The basic grievance of the petitioners is that on account of the amendment made in section 4, it has now become obligatory for them to make payment of tax in a lump sum worked out on the basis of the formula mentioned m Rule 9(1). This, according to the petitioners, has prejudicially affected them m various ways. The system which had prevailed, prior to the amendment brought about in section 4 by a Himachal Pradesh Act No. VIII of 1991 gave them the option of either paying tax on the basis of the tickets issued by them to the passengers travelling in their stage carnages to different destinations on the basis of the fare paid by them which was relatable to the distance to be covered by each passenger Now say the petitioners, they are required to pay tax in a lump sum whether any passenger actually travels in the stage carriage or not, on the basis of the formula which assumes occupancy to an extent of 60 per cent of their capacity and also takes into account the scheduled kilometers which their stage carnage can possibly cover under the permit issued in respect thereof The phrase scheduled kilometers has been defined in Rule 2 (o) to mean: "total distance in kilometers permitted to be covered by an owner of a stage carnage........ in a year by the licensing authority under the Motor Vehicles Act......" Levy and realisation of tax in such a manner, urge the petitioners is not permissible in law. We have read section 3, which is the charging section. Under it the State Government is entitled to levy or charge tax on all fares and freights in respect of all passengers carried............by motor vehicles at such rates ................ as the Government may, by notification, direct. This provision is within the ambit of Entry 56 of List II of Schedule VII of the Constitution, which says: "56. Taxes on goods and passengers carried by road or on inland waterways." 10. as the Government may, by notification, direct. This provision is within the ambit of Entry 56 of List II of Schedule VII of the Constitution, which says: "56. Taxes on goods and passengers carried by road or on inland waterways." 10. Presumably, the Legislature had the scope of this entry in mind when it also gives a meaning to the term passenger’ in section 2 (g), by saying that: “‘passenger’ means any person travelling in a public service vehicle, but shall not include the driver or the conductor or any employee of the owner of the vehicle travelling in the bonafide discharge of his duties in connection with the vehicle." 11. A Constitution Bench of the Supreme Court had occasion to deal with the scope of Entry 56 in Rai Ramkrishna and others etc. v. State of Bihar, AIR 1963 SC 1667. It observed (in para 9), that: "...........Entry 56 of the Second List refers to taxes on goods and passengers earned by road or on inland waterways. It is clear that the State Legislatures are authorised to levy taxes on goods and passengers by this entry. It is not on all goods and passengers that tax can be imposed under this entry; it is on goods and passengers carried by road................that taxes can be imposed. The expression ‘carried by road or on inland waterways is an adjectival clause qualifying goods and passengers, that is to say, it is goods and passengers of the said description that have to be taxed under this entry................But, usually, it would be inexpedient, if not impossible, to recover the tax directly from the passengers and so, it would be expedient and convenient to provide for the recovery of the said tax from the owners of the vehicles themselves............it would be perfectly competent to the Legislature to devise a machinery for the recovery of the said tax by requiring the bus operators or bus owners to pay the said tax.” These observations provide a key to the solution of the problem agitated before us by the petitioners. 12. 12. Under the Act and the rules, prior to the amendment brought about in the year 1991, the owner or the operator of a stage carriage had the option to pay the tax either by fixing a stamp on the ticket issued to the passenger after obtaining them from the appropriate authority in advance or he could do so by making a request to the Government to accept the tax in a lump sum. The Government was not bound to accept payment in a lump sum. But where it chose to accept payment of tax in a lump sum, it could require the owner or the operator of the stage carriage to pay the amount determined as lump sum tax payable by him in respect of his stage carriage in the manner provided by the rules. Where it chose the option of accepting tax in a lump sum, it was not permissible for the owner or the operator of a stage carriage to make a grievance about the quantum of tax found payable by him in accordance with the provisions of the rules. The payment of tax in lump sum was primarily contemplated for the benefit of the owners or the operators. To borrow the words of the Supreme Court, in this regard, in M/s. Sainik Motors Jodhpur and others v. State of Rajasthan, AIR 1961 SC 1480, from para 11. "......The lump sum payment is a convenient mode by which an amount is payable per year irrespective of whether the tax would be more or less if calculated on actual fares or freights. The operators pay the lump sum If they so choose, to avoid having to maintain accounts and to file returns, and the Government accepts it to avoid having to inspect accounts and to keep a check. The rates which are prescribed for a lump sum payment per year are for those who wish to avail of them," and, from para 14, "There are, however, good reasons for upholding the fixation of lump sums. The payment of the lump sum is not obligatory, and a person can elect to pay tax calculated on actual fares and freights...........................There is no compulsion for any operator to elect to pay a lump sum if he does not choose to do so. The payment of the lump sum is not obligatory, and a person can elect to pay tax calculated on actual fares and freights...........................There is no compulsion for any operator to elect to pay a lump sum if he does not choose to do so. Nor is the argument that there may be vacant periods when no passengers or goods are transported but the tax is payable, is of any force, because there may be days when the business done might result in tax in excess of the lump sum payable. The lump sum figure is based on averages, and cannot be impeached by reference to a possibility that on some days no business might be done." The emphasis in both these paragraphs is upon the optional nature of payment of the amount of tax in lump sum, payable as it is on the option of the owner or the operator, if the Government accepts to let him do so 13. In Nurpur Private Bus Operators Union. 1992 (1) Sim LC 117, also this aspect of the scheme of the Act has been kept in view. In that case this Court was called upon to consider the validity of Rule 9 as substituted with effect from October 1, 1990. A formula for determination of the lump sum of tax was brought in the rules by that amendment for the first time The Division Bench, deciding the above case, said (in para 25). "It is thus clear that the lump sum payment is an alternative method at the option of the owner provided for in the proviso to section 4 of the Act." and then, in para 25, that: "We are clear in our minds that the lump sum payment contemplated by the two provisos of section 4 of the Act does not in any way affect the owners right if he so ohoose to make payment of tax...................on...............fare collected by him in accordance with the main part of section 4 of the Act.” It concluded (in para 30) by observing: "For the aforesaid reasons, we hold that Rule 9 as substituted w.e.f 1-10-1990 is perfectly valid. The said rule, however, will have application only to cases where the owner of the motor vehicle concerned opts to pay the tax in a lump sum. The said rule, however, will have application only to cases where the owner of the motor vehicle concerned opts to pay the tax in a lump sum. It does not in any way preclude him from paying the tax on the freights and lares due under section 3 of the Act." 14. We have extracted the observations contained In the various decisions only with a view to emphasise that payment of tax in a lump sum, irrespective of the number of passengers carried or distance covered, has been upheld only on account of the fact that the option to make payment in the lump sum is of the owner or operator of the stage carnage and there was no element of compulsion upon him in this respect. 15. By the amendments which are assailed before us in these petitions, the position has materially altered. By amendment of section 4, what has now been provided is that in the case of motor vehicles, including stage carriages, in which passengers are carried, the State Government may assess the tax at lump sum in the manner prescribed. The option has now come to vest in the State Government. As far as owner or operator of a stage carriage is concerned, he has to pay tax in lump sum (and in no other manner) if the State Government decides, as has been decided by it through the amended rule, to require the owner or operator to pay tax in lump sum. 16. It is this element of compulsion which has rendered the provision relating to payment of tax by lump sum invalid. The reason is not far to seek. 17. Entry 56 of the Second List of Seventh Schedule of the Constitution enables the State Legislature to provide for the levy and collection of tax on passengers carried by road. The Legislature is not competent to provide for a tax on passengers other than those who are carried by road. This is what we feel is the legal position laid down by the Constitution Bench of the Supreme Court in Rai Ramkrishna and others, AIR 1963 SC 1667. 18. While we were dictating the judgment in open Court, the learned Addl. This is what we feel is the legal position laid down by the Constitution Bench of the Supreme Court in Rai Ramkrishna and others, AIR 1963 SC 1667. 18. While we were dictating the judgment in open Court, the learned Addl. Advocate General placed before us an uncertified copy of an order made by a Division Bench of the Punjab and Haryana High Court on May 8, 1990 in Kartar Tourist Bus Service Regd., Hoshiarpur v. The State of Punjab and another, CWP No 6661 of 1990, which had been dismissed by a one word order ‘Dismissed’. We were told by the learned Addl. Advocate General that the petition contained a challenge to an impost of the nature which has been assailed in the present writ petitions. The learned Additional Advocate General has also placed before us an uncertified copy of an order of the Supreme Court dismissing the prayer for stay made on behalf of Kartar Tourist Bus Service before it in a Special Leave Petition against the aforesaid decision of the Division Bench of the Punjab and Haryana High Court. We fail to appreciate how these orders lend any support to the contention raised before us on behalf of the respondents. We may add that we have been informed by Shri Neel Kamal, appearing for some of the petitioners in the writ petitions which are being disposed of by this judgment, that in the petition disposed of by the Division Bench of the Punjab and Haryana High Court, the challenge primarily was that an amendment had been made in the rules making it incumbent upon the owners of stage carnages to pay tax by lump sum without any amendment of the Act itself empowering the State to do so. 19. 19. The grievance of the petitioners that by making it incumbent upon them to pay tax by lump sum, they were being required to pay tax even m cases where no passenger may have been earned in their stage carnages and also in utter disregard of the distance actually travelled by a passenger, even in those instances where he may have been carried in stage carriage, by requiring consideration of scheduled kilometers for working out the amount of lump sum in the formula provided for the purpose in the rules The submission, we feel, has substance irrespective of the impassioned plea made by the learned Additional Advocate General that the amount of lump sum was being worked out on the basis of averages and that it was a matter of common knowledge that buses were generally over-loaded and carried more passengers than those for which permission had been accorded by the transport authority. Also that the fact that in some stray instances the number of passengers carried was less than 60 per cent of the sitting capacity of the bus was not of much consequence inasmuch as, the occupancy of stage carnages in a State like Himachal Pradesh was much higher than 60 per cent. 20. If the fixation of the amount of tax by Jump sum is legally permissible, as in the case where the option to pay it in lump sum is with the owners or operators of a stage carriage, no exception can be taken to the working out of the quantum of tax on the basis of the formula and on averages. This is the legal position which admits of no doubt. We may only refer to the observations 6f the Supreme Court in M/s Sainik Motors AIR 1961 SC 1480, extracted earlier. In that event, the operator will be deemed to have consented to that mode of calculation of the amount of tax payable by him in lump sum on account of the convenience that he secures for himself by avoiding to be required to maintain accounts and file returns. In that event, the operator will be deemed to have consented to that mode of calculation of the amount of tax payable by him in lump sum on account of the convenience that he secures for himself by avoiding to be required to maintain accounts and file returns. The convenience has to be ensured for himself by the owner or the operator by permitting fixation of the amount of tax by lump sum on a reasonable formula provided for the purpose by the Government But where, as in the present case, the operator is compelled to make payment in lump sum, it is difficult to equate the situation with the oat when he likes to do so at his option. That would be a case where the operator, as it were, purchases peace for himself by getting the convenience of not being required to maintain accounts and file return. 21. The learned Additional Advocate General stressed that even in the unattended provisions of the Act and the rules there were situations contemplated wherein tax was payable by the operator even in respect of the passengers who may not have travelled He points out in this respect to the Explanation to section 3(1) and to section 3 (2). 22. The Explanation to section 3 (1) does not assist the learned Additional Advocate General in any manner, it relates to a situation where passengers are actually carried by a motor vehicle but no fare has been charged from him. 23. Section 3 (2) also deals with a different situation. Under it, the privilege, right or facility to travel on concessional rate of fare is extended to a passenger on a season ticket. Tax is to be charged on that ticket having regard to the amount of the lump sum fare paid by the person obtaining the ticket or on such amount as appears to the prescribed authority to be fair and equitable having regard to the fare fixed by the competent authority under the Motor Vehicles Act May be, as canvassed by the learned Additional Advocate General, the person obtaining a season ticket may not always perform a journey so as to become liable to pay tax in respect thereof. Yet, the object with which section 3 (2) has been enacted is clearly to quantify the amount of tax payable on a season ticket where the fare is paid in lump sum. Yet, the object with which section 3 (2) has been enacted is clearly to quantify the amount of tax payable on a season ticket where the fare is paid in lump sum. Its ambit cannot be extended beyond this. 24. Before concluding, we may notice a submission of the learned Additional Advocate General, that even before its amendment in the year 1991, section 4 of the Act did not extend any absolute right to the owner or operator of a stage carriage to pay tax in a lump sum. The discretion, proceeds the submission, was even then with the State Government whether to accept the offer of an owner or operator to be permitted to pay tax in a lump sum or not. As such, says the learned Additional Advocate General, there is no basic change in the situation even after the amendment of section 4 in the year 1991 by the H. P. Act No. 8 of 1991. The amendment, according to the learned Additional Advocate General makes explicit what was always implicit in the proviso to section 4. 25. It is difficult to accept the submission so presented. The discretion of the State Government to permit an owner or operator of a stage carriage to accept payment of tax in lump sum was undoubtedly there even before the amendment of the year 1991, yet, the initiative had to come from the owner or the operator of the stage carriage who was, in the first instance, to make up his mind whether he would pay tax on the basis of actual number of passengers carried with the accompanying inconvenience of maintaining accounts and submitting returns thereof or seek permission to do so in lump sum to avoid that inconvenience. It is difficult to equate the two situations or to treat them similar to one another. It is difficult to equate the two situations or to treat them similar to one another. Shri Patyal, learned Additional Advocate General, has reiterated again and again before us that by depriving the owner or the operator of a stage carriage of the option of making payment of tax either on tickets issued to the passengers who have actually travelled or alternatively by lump sum, does not change the essence of the matter and further that the validity of the mode of payment of lump sum was not upheld by the Supreme Court on the ground of existence of the option to do so being with the owner or operator alone. We have dealt with this aspect in this judgment in its earlier part Without repeating what we have already said, we may only observe that the two Constitution Bench judgments of the Supreme Court in M/s Sainik Motors and Rai Ramakrishna of the years 1961 and 1963, clearly negative acceptance of this line of submission. 26. The discussion made by us so far leads to the conclusion that confining payment of tax under the Act to the mode of payment by lump sum makes it invalid. We declare it to be so. However, we hold that the levy and realisation of tax on the basis which has been held to be invalid by us by this judgment for the period between April 1, 1991 and September 30, 1992 shall not stand invalidated on account of our judgment. We propose to direct that the declaration made by us today shall be applicable prospectively and with effect from October 1, 1992 alone. 27. In the view that we have taken, it is not necessary for us to notice or consider the other submissions which were made before us on behalf of the parties. 28. It was urged on behalf of the petitioners that penalty has been imposed on some of them on account of the failure to follow the procedure for deposit of tax in lump sum for the period prior to September 30, 1992. 28. It was urged on behalf of the petitioners that penalty has been imposed on some of them on account of the failure to follow the procedure for deposit of tax in lump sum for the period prior to September 30, 1992. These penalties may be directed to become inoperative in this judgment itself Since we have declared the present levy and realisation of tax invalid prospectively, we feel it to be just and equitable to direct that any penalty imposed upon any of these operators on account of the breach said to have been committed by them between April 1, 1991 and September 30, 1992, shall not be enforced against them. 29. The learned Additional Advocate General prays orally for a certificate for appeal to the Supreme Court in terms of Article 134-A of the Constitution Since we have based our decision on the law declared by the Supreme Court itself, in Constitution Bench judgments, we decline the prayer. 30. The writ petitions shall stand finally disposed of in the terms aforesaid. The parties are left to bear their own costs. Order accordingly.