Holding

A tax exemption granted under Section 9(1) of the Andhra Pradesh Motor Vehicles Taxation Act can be withdrawn only by a subsequent notification under Section 9(1)(b), and in the absence of such a notification the exemption remains in force.

Summary

The appellants operated stage‑carriage services on inter‑State routes between Mysore (now Karnataka) and Andhra Pradesh and were exempted from motor‑vehicle tax by a notification dated 27 March 1963 issued under Section 9(1) of the Andhra Pradesh Motor Vehicles Taxation Act, 1963. After the Mysore State introduced a scheme that barred other operators on certain routes, the Home Secretaries of the two States met in November 1969 and resolved to delete those routes from the inter‑State agreement and to require Mysore operators to pay tax in Andhra Pradesh from 1 January 1970. No subsequent notification under Section 9(1)(b) was issued to cancel the earlier exemption, yet the Andhra Pradesh authorities issued tax demand notices to the appellants. The Supreme Court held that, under Section 9 of the Act, any cancellation or variation of a tax exemption must be effected by a notification laid before the State Legislature, and the absence of such a notification rendered the tax demands illegal. Consequently, the exemption continued to apply to the appellants for the relevant period and the demand notices were quashed. The Court set aside the High Court’s decision and allowed the appeals.

Issues considered

The validity of tax demand notices issued without a notification under Section 9(1)(b) cancelling the earlier exemption.
Whether a resolution of Home Secretaries without a formal inter‑State agreement can withdraw a tax exemption granted under the Act.
Whether the exemption granted on 27 March 1963 ceased to operate from 1 January 1970.

Legislation cited

Andhra Pradesh Motor Vehicles Taxation Act, 1963s. 2(d), s. 3, s. 9(1), s. 9(1)(b)
Motor Vehicles Act, 1939s. 63(3), s. 63(3A), s. 63(3B), s. 68-D

Subjects

motor vehicle taxtax exemptionnotificationinter‑State agreementSection 9withdrawal of exemptionstatutory interpretationSupreme Court of IndiaStage carriage

Judgment

890

A

K.M. CHIKKAPUTTASWAMY ETC .

.
B '
)
STATE OF ANDHRA PRADESH AND ORS.

April 23, 1985

(A.P. SEN AND E.S. VENKATARAMIAH, JJ .]
c
A.ndhra Pradesh Motor Vehicle! Taxation Act, 1963, s. 9 (1)-Inler-State
Bus Permits-Exemption from payment of tax-Withdrawal without issuing notifi-
cation under section 9(/)(b)-Whether valid.

Motor Vehicles Act, 1939, S. 63(3)-lnter-State agreements-Tax exemp-
D tion-Withdrawn on the recommendation of Honie Secretaries:of two States-
Whether recommendatory In nature-Acceptance by State Government-If
necessar1.

The appellants were operating stage c01.rriage services on inter-State routes
between the States of Mysore and Andllra Pradc;;h. The procedure envisaged
E counter-signature of permits in pursuance t1J the inter-State agreements entered
into by- the two States under s. 63 (3) of the Motor Veh;cles Act, 1939. On
March 27, 1963 the Government of Andhra Pradesh issued a notification under
s. 9 (1) of the Andhra Pradesh Motor Vehicles 1axation Act, 1963 exempting
from the payment of tax under the said Act of stage carriage! registered in the
State of Mysore and operating on routes which lie in both the State! of Mysore
and Andhra Pradesh. The appellants satisfied the conditions eavisage4 in the
F notification and were exempted from payment or Motor Vehicle tax.

On January 25, 1968 the State of Mysore published and approved a
scheme under s. 68 Dor the Motor Vehkles Act. fbe [scheme authorised the
State Transport Undertaking in the State or Mysore to operate exclusively stage '
carriage services on certain routes and the :said scheme came into force with
effect from January 1, 1959. The scheme e'.lvisaged that the ;existing permit
G holders on the inter-State routes could continue to operate on such {inter-State
routes subject to the condition that their permits would be rendered ineffective
on the over-lapping portions or the notified routes which lay within the State of
Mysore. After the scheme came into force the question of renewal of counter-
signatures of certain stage carriages permits came up for consideration and the
authorities in the State of Mysore declined to countersign the stage carriage

"
k. M. CHIKKAPUTTASWAM\' v. ANDliRA PRADESH Mi
A
permits. Consequently the operators in the State of Andhra Pradesh could
not continue to operate their services on the notified routes. On their repre-
sentation5 a meeting or the Home Secretaries of the two States was held on
November 7, 1%9 and it was resolved that notwithstanding the inter-State
Agreements, the ten routes which included the three routes on which the appel-
lants were operating the stage carriage services should be deleted from -the
purview of the inter-State Agreements and that the Mysore State operaters who B
' were operating the services on inter-State routes would have to pay tax for
plying the motor vehicles in the Andhra Pradesh from the quarter commencing
from January 1, 1970.

No notification was, however, issued under s.-9 (1) of the Act cancelling
the exemptions which had been grarited earlier in respect of the motor vehicles
which were operating on the inter~State routes including the motor vehicles of c
the appellants.

A demand was made. by the officers in the State of Andhra Pradesh
asking the appellants to pay tax under the Act" with effect from January 1,
1970.
CI
BeiP.g aggrieved by the· notices of demand, the appellants filed Writ
Petition luzder Article 226 questioning the· validity of the notices of demand
issued to them contending (i) that in the absence of a notification issued under
Section 9 (1) (b) of the Act revoking the exemption which had been granted
earlier. it was not open to the State of Andhra Pradesh or any of the ·officers
functioning under the Act to demand payment of motor vehicles tax under the E
Act in respect.of their motor vehicles, (ii) that the impugned notices of the
demand issued by tbe authorities caUing for payment of motor vehicles tax with
effect from January 1, 1970 were invalid and unvenforceable and (iii) that since
the appellants had spent lar~ge sums of monei on the busineess of runriing the
stage carriage serviceS on the rbutes in question, it was not open to the ~State of
Andhra Pradesh to withdraw the said concession unilaterally.
F
The High Court rejected the contentions and dismissed the Writ Petition
holding tbat since it was not necessary to issue a notification under s. 9 [(1) fOr
granting the exemption from payment of tax payable under the Act, it was also
not nece,.sary to issue a notification under s. 9 (1) of the Act for withdrawing
the eiternption already granted and normally the demand made was sufficient to
reimpose the tax payable under the Act.
G
Allowing the app~als on the question whether the exemption granted by
the Governmea.t of Andhra Pradesh from paym~nt of tax by a notification dated
March 27, 1963. issued under s. 9 (1) of the Andhra Pradesh Motor Vehicles
Taxation Act \963 in resp~ct of mJtor vehicles operated on certain inter~State
routes came to an end with effect from January 1. 1970, the Court,
H
892 SUPREME COURT REPORTS (l98S] J S.C.R.

A HELD : (1) The appellants were entitled to clain1 the exemption from
payment of tax granted by the notification issued under s. 9 (1) of the Act
during the relevant period. The judgment of the High Court in so far as it
held that the appellants \Vere not entitled to the exemption iS set aside. The
impugned notices of the demand are quashed. [904H; 905A-B]
B
(2) Section 9 of the Act provided that the Government may by notification "'
grant an exemption of the tax payable by any person or class of persons and
it may cancel or vary such examption, reduction or other modification. [899D-E]

(3) The expression 'notification' is defined in ·s. 2 (d) or the Act as a
notification rub!isbed in the Andhra )'radesh Gazette. [892E]
c
(4) Once a notification is issued under s. 3 in respect of aay motOr
vehicle, the-tax becomes payable by the reaistered owner of the moter vehicle
or any other person having possession or control thereof. Such a person can
be exempted from payment of tax only by notification issued under s. 9 (1) of
the Act. A notificatio·n issued under s. 9 being a statutory instrument can be
cancelled or modified in the manner prescribed by the Act and in no other
J) way. [899F-GJ

(5) The: State Government can grant exemption from payment of tax
or cancel the ex.emption already &ranted only in accordance with s. 9 (1). That
is the legislative mandate. [900A-BJ

(6) In the instant case, no notification was issued as provided by Cl. (b)
E of s. 9 (I) Or the Act either cancelling or withdrawing or vaFying the exemption
granted earlier by the notification issued under s. 9 (l). [900B]

. (7) The agreement arrived at by the Home Secretarie.,. on November 7,
1969 could not be considered as equivalent to an 3:greement entered into between
the two States, unless and until both the Governments agreed to give effect to it
F
and it was not effect!ve on its own force. It was only recOrnrnendatory in
character. l90JB-C]

(8) A notification publi,.hed in the Andhra Pradesh Gazette dated March
24th, 1971 under s. 63 (3A) of the Motor Vehicles Act 1939 indicated that the
Government of Andhra Pradesh had not taken a firm decision on the questioO.
>·
whether the routes in question should be de-reCognised or excluded frorn the
G purview of the' inter~State Agreements. By the said notification the State
Government of Andhra Pradesh invited objections from persons who were effec~
ted to make their representations. This notification was cancelled and a
secorid notificiltion was issued on June 22, 1972 and this notification was also
cancelled <ind a third notification containing similar proposals wa~ issued on
September 10, 1973. It clearly indicated that at no material point of time the
H routes in question had Ceased to be recognised by either of the States. The
"·
. 893'
K.M. CHIKKAPUTIASWAMY v. ANDHRA PRADESH (Venkataramith J.)

contention that the motor vehicles in question were not within the purview of A
the notification is~ued under s. 9 (1) or the Act with effect from January I, 1970
cannot be accepted. [90ID-H: 902A-H; 903A-G)

(9) It was possible that the two States could have entered into inter-
State Agreement before March 2, 1970 without following the elaborate pro-
cedure prescribed under sub-s. (3A) of s. 63 of the Motor Vehicles Act 1939.
The resolutions adopted at the meeting of Home Secretaries were not effected B
by both the State Governments <ind the order passed by the Government of
Andhra Pradesh on DeCember 29, 1969 unilaterally·merely dir~cted the Commis-
sioner of Andhra Pradesh to take further actioo. It is, however, not shown
that before the said date when sub·s. 3 (A) of the s. 63 came into force any inter-
State Agreement concluded by both the Slate Governments on the aforesaid
lines had come in~o existence.![904C-F]
c
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos, 477. 478
& 479of1971.
From the Judgment and Order dated 28. 12.. 1970 of the
Andhra Pradesh High Court in Writ Petition No. 232, 233 and 234 D
of 1970.

B. R. L. Iyengar, S.S. Javali, Attar Singh and G. N. Rao for the
Appellants.

T. V.S.N. Chari for the Respondent.

The Judgment of the Court was delivered. by E

VENK:ATARAMIAH, J. The short question which arises for
c_onsideration in these appeals by certificate is whether the ~xemptiou
granted by the Government of Andhra Pradesh from payment of tax
by a notification dated March 27, 1963 issued under section 9(1) of
the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (Act No. 5 F
of 1963) (hereinafter referred to as 'the Act') in respect of the motor
vehicles operated by the appellants on certain inter-State routes
came to an end with effect from January '1,1970.

The brief facts which have led to these appeals are these. The
G
appellant in Civil Appeal No. 477 of 1971 was operating a stage
carriage service from the year 1965 under a permit granted by the
Regional Transport Authority, Bangalore between Bangalore in the
State of Mysore (now called the State of Karnataka) and Hindupur
in the State of Andhra Pradesh. The said permit had been duly
countersigned by the concerned Transport Authority in the State of H
,
894 SUPREME COURT REPORTS (I 985] 3 S.C.R.

Andhra Pradesh. The appellant in Civil Appeal No. 478 of 1971 was
A operating a stage carriage service between Bangalore in the State of
Mysore and Kadiri in the State of Andhra Pardesh from 1963 by
virtue of a permit issued by the Regional Transport Authority Ban-
galore and countersigned by the concerned Transport !Authority iri
the State of Andhra Pradesh. Similarly, the appellant in Civil Appeal
8 No. 479 of 1971 was operating the stage carriage service between
Tumkur in the State of Mysore and Tirupathi in the State of Andhra
Pradesh under a permit issued by the Regional Transport Authority,
Tumkur and countersigned by the appropriate Transport Authority
in the State of Andhra Pradesh. The counter signatures of the three
permits, referred to above, had been done pursuant to certain
c Inter-State agreements entered into between the State of Mysore
and the State of Andhra Pradesh under section 63(3) of the Motor
Vehicles Act, 1939. On March 27, 1963 the Government of Andhra
Pradesh had issued a notification under section 9(1) of the Act, the
relevant part of which read as follows:-

0 "In exercise of the powers conferred by sub-section (1)
of section 9 of the Andhra Pradesh Motor Vehicles
Taxation Act, 1963 (Andhra Pradesh Act 5 of 1963),
the Governor of Aadhra Pradesh hereby exempts from
payment of the tax leviable under the said Act, all
stage carriages, contract carriages, public carriers, and
E private carriers, registered in the State of Mysore and
operating on a route which lies in both the States of
Mysore and Andhra Pradesh.

Provided that:-

11 i) the route is recognised by both the States to be such
a route ;

ii) every such motor vehicle is operating in accordance
with the conditions of a permit granted as a result of
an agreement arrived at between the two States ;
G
iii) the tax leviable in respect of every such motor
vehicle under any law for the time being in the State
of Mysore has been paid in full in that State."

Since the motor vehicles used by the appellants satisfied the
H conditions mentioned in the above notification they came to be
K.M. ciliKKAPUTTASWAMYv. ANDHRA PRADE;H (Venkataramian, },) 895

exempted from payment of the motor vehicles tax under the Act. A
On January 25, 1968 the Government of the State of Mysore
published an approved scheme under section 68-D of the Motor
Vehicles Act, 1939 which was popnlarly known as the 'Kolar Scheme'
authorising the State!Transport Undertaking in the State of Mysore to
operate exclusively stage carriage services on certain routes and the B
said scheme came into force with effec.t from January ·1,1969. The
said scheme provided that the State Transport Undertaking of the
State of Mysore would operate its services on all the routes covered
by the said scheme to the complete exclusion of other persons.
It however stated that the existing permit holders on the inter-State
routes could continue to operate on such inter-State routes subject
to the condition that their permits would be rendered ineffective on
the overlapping portions of the notified routes which lay within the
State of Mysore. The routes on which the appellants were running
their stage carriage services being such inter-State routes they were
also required to comply with the said condition. After the above
scheme came into force, when .the question of renewal of counter- D
signatures of certain stage carriage permits issued in favour of
certain operators in the State of Andhra Pradesh who were operating
stage carriage services from a place in the State of Andhra Pradesh
to a place in the State of Mysore came up for consideration before
the .concerned Regional Transport Authorities in the State of
E'
Mysore, the said RegionalTransport A uthorities.dcclined to counter-
sign the said permits. Consequently, the Andhra Pradesh opera·
tors could not continue to operate their services on the notified
routes. On the representation made by the said Andhra Pradesh
operators a meeting of the Home Secretaries of the two States was
held on November 7, 1969 to consider the questions arising out of F
the refusal of the Regional Transport Authorities in the St ate of
Mysore to countersign the permits issued by the authoritie~ in tile
Andhra Pradesh State and the imposition of the restrictions on the
operators on inter-State routes whose permits were still in force by
.. the scheme which prohibited the picking up or setting down of
passengers on the overlapping portions of the notified routes in the G
State of Mysore. At that meeting it was resolved inter a/ia that
notwithstanding the inter-State agreements, the ten routes mentioned
in the resolution which included the three routes on which the
appellants were operating their stage carriage services should be
deleted from the purview of the inter-State agreements and that the
H
SUPREME COURt REPORTS (1985] 3 S.C.R.

A Mysore operators who were operating their services on the said
inrer-State routes would have to pay tax for plying their motor
vehicles in the Andhra Pradesh limits from the quarter commencing
from January 1, 1970. It was further resolved that the existing
permits issued by the Regional Transport Authorities in the State of
Mysore, when they came up for renewal would not be countersig·
B ned by the Andhra ·Pradesh State Autrorities and that the said
permits would cease to be in force after the expiry of the period
for which they had been issued. On receipt of the above
recommendations made by the Home Secretaries, the Government
of Andhra Pradesh passed an order on December 29, 1969, the
relevant part of which read as follows :-
c
"ORDER:

The Government hereby ratify the conclusions
arrived at the meeting held at Hyderabad on 7th
November, 1969 between the representatives of the
u Governments of Mysore and Andhra Pradesh in regard
to the operation of road transport services on inter-
State routes between the two States as appended to
this order.

E 2. The Transport Commissioner is requested to take
necessary further action in consultation with the
Transport Commissioner, Mysore and report to the
Government, the action taken".

No notification was, however, issued under section 9(1) of the
F Act cancelling the exemption which had been granted earlier in
respect of the motor vehicles which were operating on certain inter-
State routes including the motor vehicles of the appellants. A
demand was, however, made by the concerned officers in the State
of Andhra Pradesh asking the appellants to pay tax under the Act
G with effect from January 1,1970. Aggrieved by the said notices of
demand, the appellants filed writ petitions under Article 226 of the
Constitution on the file of the High Court of Andhra Pradesh
questioning the validity of the notices of demand issued to them.
Some of the operators in Andhra Pradesh, who were affected by the
scheme published by the State of Mysore also filed writ petitons on
H the fI!e of the High Court of Andhra Pradesh questioning the validity
k.M. CilIKKAPUTTASWAMY V.A NDHRA PRADESH (Venkataramiah, J.) g9j

of the scheme on-various grounds with which we are not concerned
in these cases. Those writ petitions were dismissed by the learned A
Single Judge of the High Court of Andhra Pradesh. The Andhra
Pradesh operators who were aggrieved by the judgment of the
learned Single Judge preferred writ appeals before the Division
Bench of that High Court. Those writ appeals and the writ petitions
jiled by the appellants and some others were .all heard by a B
Division Bench of the High Court and were disposed of by a
common judgment on December 28, 1970. We are concerned in
these cases only with the writ petitions filed by the appellants. The
main gronnd urged on behalf of the appellants in their writ,petitions
was that in the absence of a notification issued under section 9(1) (b)
of the Act revoking the exemption which had been granted earlier, c
it was not open to the State of Andhra Pradesh or any of its officers
functioni.ng under the Act' to demand payment of motor vehicles tax
under the Act in respect of their mo.tor vehicles. The Division Bench
of the High Court held that since it was not necessary. to issue a
notification under section 9(1) for granting the exemption from
payment of tax payable under the Act, it was also not necessary D
to issue a notification under section 9(1) of the Act for withdrawing
the exemption already granted under the Act and that-therefore the
demand made by_ the concerned officer was sufficient to reimpose
the tax payable under the Act on the appellants. The High Court
accordingly, dismissed the writ petitions filed by the appellants and
on the applications made by the appellants issued certificates of E
fitness under Article 133(1) (b) of the Constitution to prefer appeals
before this Court. These appeals are filed on the basis of the said
certificates.

lltT!DThe appellants urged before the High Court two grounds in F
support of their contention that the impugned notices of demand
1Ssued by the authorities under the Act. calling upon them to pay
motor vehicle tax with effect from January I, 1970 were invalid
and unenforceable: (i) that the State Government, having granted
exemption by a notification issued under sectidn 9 (I) of the Act-
co~ld not withdraw or revoke the· exemption without issuing' ; G
notification under section 9 (!) (b) of the Act; and (ii) that since
the appellants had spent large sums on the business of running the
stage carriage services on the routes in question on the basis of
the representation made by the State of Andhra Pradesh that it
would ·not levey tax under the Act iu respect of those vehicles, it H
SUPREME COURT IJ.EPORTS [198SJ 3s.c.it
A was not open to the State of Andhra Pradesh to withdraw the said
concession unilaterally. The High Court rejeted both these
contentions. On the first contention, the High Court obsereved
thus:

"Even so, it was pointed out on behalf of tl1e pet1t10-
B ners that the tax concession was originally given by a noti-
fication and there was no withdrawal of such concession by
another notification.- When a concession was given by a
notification, it was argued, it could be withdrawn only by
another notification. The learned counsel appearing for
the Governments frankly admitted that there was no such
c notification withdrawing the concession, though the State
of Andhra Pradesh issued a memo dated 15.1.1970 to all
the Regional Transport Authorities informing them about
the withdrawal of the conce;sion. The important question
of the matter is, however, whether the concession had to be
D withdrawn under a notification alnoe. What should be
really examined is whether the granting of the concession
itself was required by law to be done only by a noti-
fication. Learned counsel for the petitioners altogether failed
to bring to our notice any such requirement of law. They
could not point out any statutory provision or rule which
E required that a concession of this nature could be given
only under a notification. Simply because the Government
of Andhra Pradesh thought it necessary to issue a notifica-
tion giving the permit holders tax concession though there
was no legal requirement to issue a notification for that
purpose, it does not follow that withdrawal of the conces-
sion should also be by a notification. Thus, the argument
based on the absence of a notification withdrawing the tax
concession appears to us wholly untenable."

It is unfortunate that the High Conrt while deciding the above
question overlooked the ~elevant provisions contained in Section 9
·-
iG
of the Act. Section 9 of the Act reads thns:

"9. (I) The Government may, by notificmion.-

(a) grant an exemption, make a reduction in the
\C.M. CHIKKAPUTTASWAMY v. ANDHRA PRl-P~Sl\(Venkataramiah,J.)899

rate or order other modification not involving an
A
enhancement in the rate, of the tax payble-

(i) by any person or class of persons, or

(ii) in respect of any motor vehicle or class of
motor vehicles or motor vehicles running in any parti· B
cular area; and

(b) ca~cel or vary such exemption, reduction or
other modification.

(2) Any notification issued under sub-section (1)
c
shall be laid, as soon as may be after it is issued, on
the table of the Legislative Assembly of the State while
it is in session for a total period of fourteen days which
may be comprised in one session or in two successive
sessions." (underlining by us) D

Section 9 of the Act provides that the Government may
by notification grant an exemption of the tax payable by any person
or class of persons and it may cancel or vary such exemption, reduc-
tion 0r other modification. Any notification issued under sub-
section (1) of section 9 of the Act either granting any exemption E
or cancelling it is required to be laid,. as soon as may be after it is
issued, op the table of the Legislative Assembly of the State. The
expression 'notification' is defined by section 2 (d) of the Act as a
notification published in the Andhra Pradesh Gazette. The State
Government by section 3 of the Act is authorised to levy by issuing
a notification tax on every motor vehicle used or kept for nse in a F
public place in the State of Andhra Pradesh. When once a noti·
fication is issued under section 3 of the Act in respect of any motor
vehicle, the .tax becomes payable by the registered owner of the
motor vehicle or any other person having possession or control there
of. Such person can be exempted from the payment of the tax so
levied only by a notification issued under section 9 (1) of the Act. A G
notification issued under section 9 being a statutory instrument can
be cancelled or modified in the manner prescribed by the Act and in
no other way. It is significant that any notification issued under sec-
tion 9(1) of the Act either granting exemption or cancelling or vary-
ing such exemption has got to be placed on the table of the Legisla-

"
<Joo SUPREME COURT REPORTS (1985] 3 S.C.R

A. tive Assembly. Both the notification issued under section 3 of
the Act and the notification issued under Bection 9 (I) thereof fall
within the meaning of the expression 'law' referred to in Article
265 of the Constitution. The State Government can grant exemption
from payment of tax or cancel an exemption already granted only •
in accordance with section 9 (1) of the Act. That is the legislative
B mandate .. In the instant case, admittedly no notification is issued
as provided hy clause (b) of section 9 (1) of the Act either cancel-
lingor withdrawing or varying the exemption granted earlier by the
•
notification issued under section 9 (I). The High Court erred in
holding that the learned counsel for the appellants had not drawn
its attention to any statutory provision or rule which prbviJed that
C,
a concession of this nature could be given only under a notification.
A mere perusal of the provisions of section 9 and the notification
which is issued thereunder, would have made it very clear that no
exemption from the payment of the tax due under the Act could be
granted excempt by the issue of a notification. It is hazardous to
D. depend on one' memory while construing a statutory provision and
this case serves as a good illustration of this statement. Having
held that it was not necessary to issue a notification for granting an
exemption, the High Court misled itself into thinking that the.
issue of a notification for the purpose of withdrawing the concession
already granted was also unnecessary. ·The reason given by the
E. High Court for rejecting this contention of the appellants is, there-
fore wholly untenable.

Having realised the weakness of the ground on which the High
Court had rejected the contention of the appellants in this regard,
F the learned counsel for the State Government raised a new ground
before us in order to sustain the impugned notices of demand. He
contended that the exemption from payment of the tax leviable
under the Act could be claimed by the appellants only so long.
as the routes on which they were operating their stage carriages .
continued to be recognised by both the States to be such routes, and
G in support of this contention he relied upon clause (i) of the proviso
to the notification dated March 27, 1963 under which .exemption
had been granted. He argued that since at the meeting of the
Home Secretaries held on November 7, 1969 it had been agreed
that the vehicles which were being operated by the Mysore opera-
tors would have to pay the tax to the State of Andhra Pradesh with
effect from January I, 1970, the l)otification granting exemption
H.
K.M. CHIKKAPUTTASWAMY v.. ANDHRA PRADESH(Venkataramiah, J.) 90!

became inapplicable to the motor vehicles of the appellants with
effect from the said date. In other ,;,ords 'the contention urged on A
behalf of the State of Andhra Pradesh was that since the motor
vehicles operated by the appellants cea5ed to answer the description
of the motor vehicles to which the notification granting exemption
applied, these appellants could not claim the benefit of it. · On
going through the records before us, we are of the view that this B
• ground is equally unsustainable. The agreement arrived at by the
Home Secretaries on November 7, 1969, could not be .considered
as equivalent to an greement entered into between the two
States, unless and until both the G)vernments agreed to give effect
I
to it. It was not effectivo on its own forco. It wH only reco:nrmn·
~. c
' ' datory in character. It is no doubt true that on December 29,
1969 the Government of Andhra Pradesh issued an order unilate·
rally stating that it had ratified the conclusions arrived at by the
Home Secretaries at the meeting of November 7, 1969 in regard to
the operation of road transport services on inter·State routes bet-
ween the two States, but it is seen that by the very order the Govern-
ment of Andhra Pradesh directed tbe Transport Commissioner D
Andhra Pradesh to take necessary further action in consultation
with the Transport Commissioner, Mysore and to report to the
Government the action taken by him. It is seen fro1n a notification
published by the Government of Andhra Pradesh in the Andhra
Pradesh Gazette Part I Extraordinary dated May 24, 1971 under sec-
tion 63 (3-A) of the Motor Vehicles Act, 1939 that the Government E
of Andhra Pradesh had not till then taken a firm decision on the
question whether the routes in question should be de-recognised

..
or excluded from the purview of inter-State agreements. The relevant
part of that notification reads thus:-

"DRAFT AGREEMENT BETWEEN ANDHRA F
PRADESH AND MYSORE STATES RE: TRA~SPORT
• •
BY MOTOR VEHICLES .

(G. 0. Rt. No. 1189, Home (Transport I) Depart-
ment, dt. Ist April, 1971)
...
G
• NOTIFICATION

At the inter-State Conference held between the
representatives of the Governments of Andhra Pradesh
and Mysore States at Hyderabad on 7. 11. 1969 an<) ff
902 SUPREME COURT REPORTS (1985] 3 S.C.R.
A 11. 5. 1970, and at B1ng1lore on 6/7. 7. 1970, the outstand·
ing issues between the two States were discussed and it is
proposed to enter into an inter-State agreement between
Andhra Pradesh and Mysore State Governments on the fol·
lowing issues:-

8 Item No. I (a) ;-It is proposed to delete the undermen·
tioned inter-State routes from the illler-State Agreement
as it is not possible for the Andhra Pradesh State to •
implement the agreements due to the approved schel)les
of the Mysore State Road Transport Corporation:-
c I. Tirupathi to Tumkur

2. Bellary to Manthralayam

3. Gorantla to Bangalore

0 4. Anantapur to T. B. Damsite

5. Hindupur to Bangalore.

6. Kadiri to Bangalore.

E As a result of deletion of these routes from the agree-
ment the Andhra Pradesh authorities will not countersign
the permits issued by the Mysore Authorities on these
routes when .they come up for renewal and counter
signatures issued by both the States on these routes will
lapse by efflux of time. The vehicles plying on these
F routes are not entitled for single point taxation as a result
of deletion of these routes from the agreement with effect
•
from I.I. 1970----,-------------~·-

(Underlining by us) •
G
From the portion of the notification extracted above, it is
seen that even on May 24, 1971 the question of deletion of the
routes between Tirupathi and Tumkur, Hindupur and Bangalore •
and Kadiri and Bangalore, from the purview of the inter-State
agreement was still in the stage of a proposal. By the said notifica-
H tion the State Government of Andhra Pradesh had invited
objections from persons who were affected by it, to make their r~-
K.M. CHIKKAPUTTASWAMY v. ANDHRAPRA.DESH(Venkataramiah, J.)903

presentations as can be seen from tbe last part oftbe said notification
wliich reads thus:· A

"The above proposal is hereby pubilshed for informa·
tion of persons likely to be affected thereby as required
under section 63 (3-A) of the Motor Veh_icles Act, 1939;
and notice is hereby given that the proposal will be -taken B
into consideration after the expiry o.f · 30 days from the
date of its publication in the Andhra Pradesh Gazette
(both days inclu·sive) and that any objection or sugges-
tion which may be received from any person with respect
thereto, before the aforesaid time, will be considered by the
Government ·of Andhra _ Pradesh, Objections and sugges- c
tion should be addressed to the Secretary to Government
of Andhra Pradesh in the Home Department, Hyderabad in
duplicate."

The records produced before us further disclose that the
D
above notification issued under· section 63 (3-A) of tho Motor
vehicles Act, 1939 was cancelled and a second notification con-
taining fresh proposals was issued on Ju1.e 22, 1972 and that the
said second notification was cancelled and a third notification
containing similar proposals was issued_ on September JO, 1973. It
is seen that ultimately an inter-State agreement was arrived at E
between the Government of Andhra Pradesh and the Govern men..,
of Karnataka on August 28, 1975 under section 63 (3-B) of the
Motor Vehicles Act, 1939 by which the exemption which had been
given earlier was continued. It is also not disputed that the
permits issued in favour of the appellants, having been in the mean-
while countersigned when they came up for renewal by the concer- F
. ned authorities in the State of Andhra Pradesh were in force at
th«time when the new inter-State agreement came into force and
the appellants were eligihle for the benefit of the exemption agreed
upon by thetwo States. It is, therefore, clear that at no material
point of time the routes in question had ceased to be recognised by
either of the States. Hence, the submission that the motor vehicles in G
question were not within the purview of the notification issued under
section 9 (1) of the Act with effect from January 1, 1970 cannot be
accepted.

It was pext ur~ed that sqb-section (3-A) of sectio11 63 of the
H
904 SUPREME COURT REPORTS [1985] 3 s.c.R.

A Motor Vehicles Act, 1939 which prescribed a detailed procedure for
the purpose of concluding an inter-State agreement was introduced
by way of an amendment with effect from March 2, 1970
by Act 56 of 1969 and before that date no such 1970 formality
was required to be followed before entering into any such
agreement. It was enough that the two State Governments mutually
B agreed upon the terms of the agreement for purposes of the provsio
to sub-section (3) of section 63 of the Motor Vehicles Act, 1963 •
as it stood then!Jn the above situation it was ur.ged that the resolu-
tion passed by the Home Secretaries on November 7, 1969 and
the order passed by the Government of Andhra Pradesh on Decem-
ber 29, 1969 ratifying the said resolutions were sufficient in the
c eye of law to treat the inter-State routes referred to therein as
having been deleted from the purview of the earlier inter-State
agreements. This argument does not carry the case of the Govern-
ment of Andhra Pradesh any further. It may be that it was possi-
ble for the two Slates to enter into an inter-State agreement before
D March 2, 1970 without following the elaborate procedure prescribed
under sub-section (3-A) of section 63 of the Motor Vehicles Act,
1939. But as already mentioned the resolutions adopted at the
meeting of the Home Secretaries were not effective unless they
were agreed upon by both the State Government later on and the
order passed by the Government of Andhra Pradesh on December
E 29, 1969 unilaterally merely directed the Transport Commissioner
of Andhra Pradesh to take further action after consulting the
Transport Commissioner of the State of Mysore. It is not shown
that before March 2, 1970 when sub-section (3-A) of section 63
of the Motor Vehicles Act, 1939 came into force any inter-State
agreement concluded by both the State Governments on the lines
F of the conclusions arrived at by the Home Secretaries had come into
existence. Hence we do not find any substance in this contention
too.

In view of the above, we do not consider it necessary to go
into the question whether the Government of Andhra Pradesh was
G
precluded by the rule of promissory estoppel from issuing the impug-
ned notices of demand.

After giving our anxious consideration to the whole case, we
are of the view that the appellants were entitled to calim the exemp-
tion granted by the notification issued under section 9 (1) of the
H
K.M. CH!KKAPUTTASWAMY v. ANDHRA PRADESH (Venkatarmiah, J.) 905

Act during the relevant period. In the result, the judgment of the . A
High Court insofar as it held that the appellants~were not entitled to
the exemption from paymeilt of tax dnring·the relevant period, is
liable to be set aside. We, accordingly, set aside the judgment
of the High Court to the above extent. The impugned notices of
demand are quashed. The Government of Andhra Pradesh is
directed not to take any stepS"to recover the tax demanded by it B
from the appellants. The appeals are accordingly allowed. Having
regard to .the circumstances of the case, we make no order as to
costs.

c

A.P.J. Appeals allowed.

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