IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 10050 of 2011 For Approval and Signature:
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= MAHASAGAR TRAVELS LIMITED - Petitioner(s) Versus STATE OF GUJARAT & 2 - Respondent(s) ========================================================= Appearance :
MR RAMKRISHNA B DAVE for Petitioner(s) : 1, MS MAITHILI MEHTA, AGP for Respondent(s) : 1 - 3.
========================================================= CORAM :
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 12/03/2012 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE J.B.PARDIWALA) By way of this petition under Article 226/227 of the Constitution of India, the petitioner, a travel agency, seeks to challenge the order passed by the Deputy Secretary (Department of Ports and Road Transport, State of Gujarat) in Revision Application No.6 of 2006 in exercise of his powers under Section 14A of the Bombay Motor Vehicles Tax Act, 1958 (for short, 'the Act of 1958') rejecting the Revision Application preferred by the petitioner and thereby confirming the order passed by the Commissioner, Road Transport, State of Gujarat dated 31st December 2004 in Tax Appeal Nos.11 and 12 of 2005 and the order dated 31st December 2004 passed by the Regional Transport Officer, Junagadh, directing the petitioner to deposit a sum of Rs.1,09,000=00 towards motor vehicle tax with penalty at the rate of 25% to the tune of Rs.27,000=00 for the period between 1st April 2001 to 30th September 2001.
Facts relevant for the purpose of deciding this petition can be summarised as under :
The petitioner is a private limited company engaged in the business of travels. Record reveals that the petitioner bought two motor vehicles of Make A/L Model 2000, Type 'P' Bus from Ashok Leyland Finance Limited, Ahmedabad. At the time of purchase, the vehicles were only with Chassis. The petitioner informed the authority concerned by filing Form C.R.TEM.A about the same which, in substance, was an application for temporary registration under Rule 52-1 of the Gujarat Motor Vehicles Rules, 1989 (for short, 'the Rules of 1989').
Record reveals that temporary registration was obtained on 4th April 2001. After obtaining the temporary registration of the Chassis as required under Section 43(2) of the Motor Vehicles Act, 1988 (for short, 'the Act of 1988'), the Chassis were sent to the workshop for building the body on it. Section 43(2) of the Act of 1988 provides that temporary registration made under the section shall be valid only for a period not exceeding one month and shall not be renewable. However, there is a proviso which provides that where a Motor Vehicle so registered is a Chassis to which a body has not been attached and the same is detained in the workshop beyond the said period of one month for being fitted with a body or due to any unforeseen circumstances beyond the control of the owner, the period may, on payment of such fees, if any, as may be prescribed, be extended by such further period or periods as the registering authority or other prescribed authority, as the case may be, may allow.
In the present case, it appears that after obtaining initial temporary registration of both the Chassis on 4th April 2001, the body could not be attached as, according to the petitioner, the workshop where both the Chassis were sent remained closed on account of riots which had flared up all over the State at the relevant point of time. It seems to be the case of the petitioner that persons working in the workshop were not available and, therefore, the body could not be attached within one month, i.e. during the period when the temporary certificate of registration dated 4th April 2001 was in force.
Record reveals that as the body on the Chassis could not be attached upto October 2001 and as the petitioner failed to get the temporary certificate of registration renewed further as provided under the proviso to Section 43(2) of the Act of the Act of 1988, the respondents-authorities initiated proceedings to levy motor vehicle tax on the bus of the petitioner as a designated Omni bus i.e. Contract Carriage Passenger Bus to the tune of Rs.6,62,040=00 including interest and penalty, on the premise that on expiry of one month of temporary registration certificate the vehicles are deemed to have been used in the State as provided under Section 3(2) of the Act of 1958.
Record reveals that the petitioner preferred an application on 17th July 2001 for renewal of temporary registration under Section 43 but the said application was not processed further as the petitioner had failed to deposit the requisite fees along with the application and, therefore, the respondents-authorities refused to grant renewal for the said period.
Record reveals that after October 2001, the petitioner applied under Section 39 of the Act of 1988 for permanent registration and, accordingly, got the two vehicles registered permanently under the Act of 1988.
The petitioner was served with a notice of demand dated 27th November 2001. The notice of demand was made a subject matter of challenge by the petitioner by filing appeals being Tax Appeal Nos.33 and 34 of 2002 before the Commissioner of Transport, State of Gujarat, Ahmedabad. It appears that the appellate authority partly allowed the appeals by quashing and setting aside the orders dated 27th November 2001 passed by the Regional Transport Officer, Junagadh, raising demand for tax with penalty and interest and remanding the matters to the authority concerned for fresh adjudication.
Upon remand of both the appeals, the authority concerned once again adjudicated the matters and confirmed the levy of tax with penalty and interest.
Aggrieved by the said order passed by the authority concerned, appeals were preferred before the appellate authority under Section 14 of the Act of 1958. Both the appeals came to be dismissed by the appellate authority, against which, the petitioner approached the revisional authority, i.e. the State Government, under Section 14A of the Act of 1958. The Revision Applications also came to be rejected by the authority concerned confirming the orders passed by the authorities below, namely, the Regional Transport Officer, Junagadh and the Commissioner of Transport, Gandhinagar.
It is at this stage that the petitioner herein thought fit to challenge the orders passed by the authorities and that is how he has come up before this Court by way of this petition.
I. Contentions on behalf of the Petitioner :
Learned advocate appearing for the petitioner vehemently submitted that the entire approach of the authorities concerned is erroneous and contrary to law. According to him, the levy of tax for the period between 4th April 2001 to October 2001 with penalty and interest is absolutely illegal and contrary to the provisions of the Act of 1988 and the provisions of the Act of 1958 as well. He submitted that the authorities concerned ought to have appreciated an important question of law that due to circumstances beyond the control of the petitioner the body could not be attached to the two Chassis as most of the workshops in the area remained closed due to riots which were prevailing at that point of time. He submitted that as a matter of fact, the petitioner did apply for extension of the temporary certificate registration which was granted by recovering appropriate tax at the rate applicable to Chassis upto the final registration of both the vehicles. His main contention is to the effect that the respondents have committed substantial error of law in invoking the provisions of Section 3(2) of the Act of 1958.
According to the learned advocate for the petitioner, the provisions of Section 3(2) of the Act of 1958 has no application in the facts and circumstances of the present case. Learned advocate, therefore, submitted that this is a fit case where the orders of the respondents-authorities deserve to be quashed and set-aside.
II. Contentions on behalf of the Respondents :
Learned AGP Ms.Mehta vehemently submitted that as the petitioner failed to get the temporary certificate of registration renewed on expiry of one month as provided under Section 43 of the Act of 1988, the authorities concerned were justified in law to presume that both the vehicles were used by the petitioner within the State of Gujarat as per the deeming fiction provided under Section 3(2) of the Act of 1958.
The sum and substance of the contention of the learned AGP is that as the petitioner had obtained temporary registration upto 4th April 2001 and as he failed to get the temporary registration renewed as per the provisions of Section 43(2), more particularly, the proviso to sub-section (2) of Section 43 of the Act, the respondents-authorities are justified in initiating the proceedings to levy the motor vehicle tax on both the vehicles of the petitioner as a Contract Carriage Passenger Bus. Learned AGP would vociferously submit that in October 2001 the petitioner obtained the permanent registration under Section 39 and, therefore, the respondents-authorities came to the conclusion that both the vehicles which were sent for attaching the body to the Chassis to the workshop of Mahasagar Travel Limited were kept for use on the road from 4th April 2001 in the absence of renewal of the temporary registration under Section 43 of the Act. The learned AGP, therefore, submitted that there is no merit in this petition and the same deserves to be rejected.
III. Analysis :
We shall now proceed to undertake the analysis of the contentions as canvassed by the learned counsel for the respective parties. However, before undertaking this exercise we deem fit and proper to quote and look into few relevant legal provisions applicable in the present case. Section 43 of the Motor Vehicles Act, 1988 provides for temporary registration. Section 43 reads as under :
“43. Temporary registration .- (1) Notwithstanding anything contained in section 40 the owner of a motor vehicle may apply to any registering authority or other prescribed authority to have the vehicle temporarily registered in the prescribed manner and for the issued in the prescribed manner of a temporary certificate of registration and a temporary registration mark.
(2) A registration made under this section shall be valid only for a period not exceeding one month, and shall not be renewable :
Provided that where a motor vehicle so registered is a chassis to which a body has not been attached and the same is detained in a workshop beyond the said period of one month for being fitted [with a body or any unforeseen circumstances beyond the control of the owner], the period may, on payment of such fees, if any, as may be prescribed, be extended by such further period or periods as the registering authority or other prescribed authority, as the case may be, may allow.
(3) In a case where the motor vehicle is held under hire- purchase agreement, lease or hypothecation, the registering authority or other prescribed authority shall issue a temporary certificate of registration of such vehicle, which shall incorporate legibly and prominently the full name and address of the person with whom such agreement has been entered into by the owner.”
On plain reading of Section 43, it is very clear that before a vehicle is registered permanently, the owner of a motor vehicle can apply to any registering authority or other prescribed authority to have a vehicle temporarily registered in the prescribed manner and if the owner applies for such temporary registration then a temporary certificate of registration may be issued by the authority concerned in the prescribed manner. Section 43 also provides that such temporary registration will be valid only for a period not exceeding one month and shall not be renewable unless the owner brings to the notice of the authority concerned that temporary registration of the motor vehicle is only a Chassis to which a body has not been attached and for circumstances beyond the control of the owner the body could not be attached on the Chassis within a period of one month, then in that case, the owner can apply for extension of temporary registration and, on applying for the same, the registering authority or other prescribed authority may extend the temporary registration by issuing a fresh certificate for the same.
Section 3 of the Act of 1958 provides for levy of tax. Section 3 reads as under :-
“3. Levy of tax. - (1) Subject to the other provisions of this Act, on and from the 1st day of April 1958, there shall be levied and collected on all motor vehicles used or kept for use in the State, a tax at the rates fixed by the State Government, by notification in the Official Gazette, but not exceeding the maximum rates specified in the First, Second and Third Schedules:
Provided that in case of any motor vehicles (irrespective of whether they are specified in the First Schedule or the Second Schedule or Third Schedule) kept by a dealer in, or manufacturer of such vehicles, for the purpose of trade, there shall be levied and collected annually such amount of tax not exceeding Rs.250 as the State Government may, by notification in the Official Gazette specify on those motor vehicles only which are permitted to be used on the roads in the manner prescribed by rules made under the Motor Vehicles Act, 1988:
Provided further that, if the State Government, because of disparity in the rates of tax prevailing in certain areas of the State immediately before the commencement of this Act or for any other reason, is of opinion, that the levy and collection of tax on motor vehicles immediately at a uniform rate throughout the State, is likely to cause undue hardship to owners or persons having possession or control of such vehicles in those areas, or to affect adversely trade and commerce or the development of motor transport and other industries in such areas, the State Government may levy and collect the tax on motor vehicles, or any class thereof at different rates in those areas, so however that by increase or decrease of the rate of tax annually in those areas, within a period of three years, a uniform rate of tax is levied throughout the State.
(2) Except during any period for which the Taxation Authority has, in the prescribed manner, certified that a motor vehicle was not used or kept for use in the State, the registered owner, or any person having possession or control, of a motor vehicle of which the certificate or registration is current, shall, for the purposes of this Act, be deemed to use or keep such vehicle for use in the State.
(3) No tax shall be leviable under sub-section (1) on motor vehicles on which tax is leviable under sub-section (1) of section 3A.”
So far as the present case is concerned, the relevant and the most important provision is Section 3(2). On plain reading of Section 3(2), it is very clear that it is only that particular period for which the taxation authority has, in the prescribed manner, certified that a motor vehicle was not used or kept for use in the State and that the owner of the motor vehicle will be exempted from paying the necessary tax. Otherwise, by a deeming fiction as provided in clause (2), it shall be presumed that the vehicle has been used in the State.
The import of the words “of which the certificate of registration is current” are significant so far as the present case is concerned.
In the present case, it is undisputed that the certificate of temporary registration which was issued in April 2001 remained valid for a period of one month. Thereafter, it is the case of the respondents that the petitioner did not apply for extension of the same and, therefore, by taking recourse of Section 3(2), the respondents-authorities came to the conclusion that the petitioner is liable to pay tax as his vehicles, on expiry of one month of temporary registration, can be said to have been used in the State of Gujarat. We do not propose to go into the disputed questions of fact as to whether in the month of July 2001 the petitioner applied for extension of temporary certificate of registration and whether the authorities concerned allowed the same by accepting the requisite amount of tax from the petitioner. We are only concerned with the action of the respondents-authorities in invoking Section 3(2) for the purpose of drawing a presumption that on expiry of one month of temporary registration the vehicle is deemed to have been used in the State. What has been lost sight of and has been completely overlooked is the fact that Section 3(2) of the Act of 1958 will apply only in cases where the registered owner of a vehicle is holding a certificate of registration which is current. Meaning to say that if there is already a certificate of registration in force then only such a period will be exempted so far as the liability of tax is concerned, which is certified by the taxation authority in the prescribed manner as regards the non-usage of the motor vehicle in the State.
In the present case, when the authorities decided to levy tax by invoking Section 3(2) which provides for a deeming fiction, undisputedly the petitioner as owner of the motor vehicle was not holding any certificate of registration. On the contrary, the case of the respondents-authorities is that there was no extension of temporary registration. Thus, this omission on the part of the respondents- authorities in completely misinterpreting the provision of Section 3(2) will change the entire complexion of the matter. We are of the view that the entire exercise undertaken by the respondents-authorities is contrary to law. We may unhesitatingly say that the action of the respondents-authorities is contrary to the constitutional mandate as provided under Article 265 of the Constitution of India. Article 265 reads as under :
“265. Taxes not to be imposed save by authority of law :- No tax shall be levied or collected except by authority of law.”
The very mandate of Article 265 of the Constitution of India is that there can be no levy or collection of tax without the authority of law. That of course, is a fundamental thing which cannot be allowed to be infringed.
Thus, in light of the settled position of law and the true and correct interpretation of Section 3(2) of the Act of 1958, we are left with no other option but to quash the orders passed by the respondents-authorities levying motor vehicle tax upon the petitioner for the period between April 2001 to October 2001.
In the result, the petition succeeds. The order passed by the Deputy Secretary, Road Transport Department, State of Gujarat, in Revision Application No.6 of 2006 in exercise of his powers under Section 14A of the Act of 1958 is hereby quashed and set-aside. The order passed by the Commissioner, Road Transport Department, State of Gujarat dated 31st December 2004 in Tax Appeal Nos.11 and 12 of 2005 and the order dated 31st December 2004 passed by the Regional Transport Officer, Junagadh are also hereby quashed and set-aside. However, in the facts and circumstances of the case there shall be no order as to costs.
(Bhaskar Bhattacharya, Acting C.J.)
(J.B.Pardiwala, J.)
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