IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 5-7-2010 Coram THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.P.No.2723 of 2006 W.P.M.P.No.2842 of 2006 S. Kumar ..Petitioner Vs. The Regional Transport Officer, Dharmapuri ..Respondent The prayer in the writ petition is to issue a writ of certiorari calling for the records of the respondent relating to Memo R.No.A3/30358/2002 dated 26.7.2005 and quash the same demanding tax and penalty amounting to Rs.20,836/- for the period from 16.1.2003 to 31.3.2003 after the expiry of fitness certificate on 31.1.2002. For Petitioner : Mr.N. Gopalakrishnan For Respondent : Mr.R.Murali, Government Advocate O R D E R The prayer in the writ petition is to quash the order dated 26.7.2005 demanding tax and penalty amount of Rs.20,836/- for the period from 16.1.2003 to 31.3.2003 after expiry of fitness certificate on 31.1.2002. 2. The case of the petitioner is that he was owning a mini bus bearing registration No.TN-33-U-0465 and the permit of the vehicle was cancelled for non-payment of tax for the period from 1.2.2002. Petitioner filed statutory appeal before the State Transport Appellate Tribunal, Chennai in Appeal No.987 of 2003 and the appeal was dismissed as it was barred by limitation. The respondent issued a memo on 13.9.2004 and called upon the petitioner to pay tax amount of Rs.10,418/- for the period from 17.1.2003 to 9.4.2003 with 100% penalty totalling Rs.20,836/-, failing which it was stated that action under the provisions of the Revenue Recovery Act will be initiated. Petitioner was also directed to pay compounding fee of Rs.1,500/- and Rs.4,500/-. Petitioner is not disputing the payment of compound fee and he is aggrieved only against the demand of Rs.20,836/- towards tax arrears with penalty. Petitioner filed https://hcservices.ecourts.gov.in/hcservices/ W.P.No.6724 of 2004 and challenged the said demand. The said writ petition was disposed of on 1.3.2005 with direction to treat the demand notice as show cause notice with liberty to the petitioner to make representation before the respondent. The petitioner submitted a representation/objection on 10.7.2005 and stated that in view of the order of this Court reported in 1994 WLR 263 (M/s.Gopu Transport, Madras-83 v. R.T.O., Madras West) there is no liability on his part to pay tax after expiry of the period of fitness certificate, which expired on 31.1.2002. The respondent again passed an order on 26.7.2005 and directed the petitioner to pay the said amount as per Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, 1989. The said order is challenged in this writ petition on the ground that the matter in issue is concluded by the judgment of this Court referred above and that for violating Rule 172(6) there must be a valid permit, and when the permit itself has been cancelled, the question of demand of tax and penalty would not arise. 3. The respondent has filed a counter affidavit contending that the mini bus was granted permit to ply in the route Indur Police Station to C.Pudur and the permit was violated from 22.3.2001 to 21.3.2006. Petitioner paid tax till 30.6.2002 and his stoppage report is dated 1.7.2002. It was stated by the petitioner that the vehicle requires major repairs and therefore he sought for permission as per Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, 1989. Respondent herein granted permission for stoppage of the vehicle from 1.7.2002 to 16.1.2003. Since the petitioner has not taken steps to resume the service of the vehicle the Regional Transport Authority rejected further permission under Rule 172(6). The permit itself was cancelled under Section 86(1) of the Motor Vehicles Act, 1988 with effect from 9.4.2003. The permit holder has not taken any steps to carry out the repairs of the vehicle to meet the needs of the travelling public. No tax was assessed from 1.7.2002 to 7.1.2003 i.e, for the period in which permission was granted to stop the vehicle. A demand notice was issued to the petitioner to pay a sum of Rs.10,418/- + penalty of Rs.10,418/- after complying with the direction issued by this Court and the petitioner's objections were also considered. Petitioner's counsel also appeared and contended that when FC is not valid, the liability of payment of tax does not arise. As permission to stop the vehicle was not given, petitioner is bound to pay tax till the permit was cancelled. There is no illegality in the said order. 4. The learned counsel for the petitioner relying upon the judgment of this Court reported in 1994 WLR 263 (cited supra) contended that the matter in issue is covered by the said judgment and therefore the order of the respondent is bad in law. 5. In answer to the said contention, the learned Government Advocate appearing for the respondent relied on the judgment of this Court reported in 1993 WLR 476 (Raj Fernandez v. Regional Transport https://hcservices.ecourts.gov.in/hcservices/ Officer, Madras) and the judgment of the Supreme Court reported in (2004) 7 SCC 139 (State of Orissa v. Bijaya C. Tripathy). The learned Government Advocate also relied on Rule 3 of the Tamil Nadu Motor Vehicles Taxation Act, 1974, and contended that the petitioner is statutorily bound to pay the tax. 6. I have considered the rival submissions made by the learned counsel for the petitioner as well as the learned Government Advocate for the respondent. 7. The point in issue is whether the petitioner is liable to pay tax with penalty to the petitioner's minibus for the period for which the petitioner failed to get permission to stop the vehicle. 8. The relevant provisions of the law to be considered in this case are Section 3(1) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, and Rule 172(6) & 279 of the Tamil Nadu Motor Vehicles Rules, 1989. Section 3 of the Tamil Nadu Motor Vehicles Taxation Act, 1974, reads as follows: "3. Levy of tax. (1) Subject to the provisions of sub-section (2) tax shall be levied on every motor vehicle used or kept for use in the State of Tamil Nadu at the rate specified for such vehicle in the First Schedule or in the Second Schedule or in the Third Schedule, as the case may be. (2) The Government may, by notification, from time to time, increase the rate of tax specified in the Schedules: Provided that such increase, by notification, under this sub-section shall not, in the aggregate, exceed fifty percent of the rate specified in the First Schedule or in the Second Schedule or in the Third Schedule, as the case may be. (3) All references made in this Act to the Schedules shall be considered as relating to the Schedules as for the time being amended in exercise of the powers conferred by this section." Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, 1989, reads as follows, "172(6). It shall be a condition of the permit of every transport vehicle that the https://hcservices.ecourts.gov.in/hcservices/ vehicle will be so maintained as to be available for the service for which the permit was granted for the entire period of currency of the permit and that the permit is liable to be suspended or cancelled, after due notice to permit holder if the vehicle has not been used for the purpose for which the permit was granted for a continuous period of more than ten days during the period for which the permit authorise the use of the vehicle on the road, unless the holder of the permit had obtained in writing the prior permission of the Transport Authority to suspend the service of the vehicle for a specific period exceeding ten days: Provided that no holder of a permit shall ordinarily be granted permission to suspend the service of the vehicle for a continuous period exceeding twenty days at a time: Provided further that the period may be extended by such further period or periods, as the Transport Authority thinks fit: Provided also that the holder of a permit shall pay the fee prescribed i9n the Table under rule 279." Rule 279 of the Tamil Nadu Motor Vehicles Rules, 1989, reads thus, "Rule 279. Fees. The fee which shall be charged under the provisions of this Chapter shall be as specified in the Table below. Such fees shall be paid in case in the Regional Transport Office or in the office of the State Transport Authority or through chalan in the Government Sub-Treasury or Treasury or through Indian Bank, Indian Overseas Bank or State Bank of India. THE TABLE .................... .................... Provided that in the case of an applicant belonging to Scheduled Caste or Scheduled Tribes, the fee for grant or renewals of permit other than temporary permit shall be 25 (twenty-five) percent of the fee prescribed in the table above." https://hcservices.ecourts.gov.in/hcservices/ 9. Section 3(1) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, states that tax becomes payable in respect of the vehicles "used" or "kept for use". The vehicle is deemed to have been kept for use until the validity of permit unless the stoppage is actually reported and records surrendered to the appropriate authority. The said issue was considered by this Court in the decision reported in 1993 WLR 476 (cited supra). In the said decision it is held that a permit holder is bound to use the vehicle for the purpose for which the permit had been obtained and that is the condition of the permit. If he is withdrawing the service, even temporarily, and not utilising the permit, he is bound to inform the authorities and give all relevant particulars in the prescribed format. It is to be stated from which date the vehicle is to be stopped, the place where the vehicle is kept and the probable date of resumption of service. The vehicle owner is bound to inform the last period for which tax is paid and the date of expiry of the fitness certificate. If he does not do so, he is deemed to be using the vehicle or keeping it for use, within the meaning of section 3 of the Act. Thus, there is a statutory condition as per Section 3 and a statutory liability is cast on the vehicle owner that he should perform his duties properly. In paragraph 10 of the said decision this Court held as follows, "10. A perusal of the above provisions clearly indicates that they have been framed with a particular scheme. A permit holder is bound to use the vehicle for the purpose for which the permit had been obtained and that is condition of the permit. If he is withdrawing the service even temporarily, and not utilising the permit he is bound to inform the authorities and give all the relevant particulars. It is seen from the prescribed Form that he is bound to inform the date from which the vehicle is stopped, the place where the vehicle is kept and the probable date of resumption of service. He is also required to inform the last quarter for which tax had been paid and the date of expiry of the fitness certificate. If he does not do so, he is deemed to be using the vehicle or keeping it for use within the meaning of S.3 of the Taxation Act. That is why a statutory fiction is introduced by R.3 of the Taxation Rules. The holder of permit is deemed to use the vehicle or keep it for use, unless he acts under the relevant rules and gives information to the authorities concerned that the vehicle had been stopped and has not been used. The work 'use' referred to in S.3 of the Taxation Act is not a legal use but a factual use. If a vehicle is used factually or kept for use factually, even though the owner of the vehicle https://hcservices.ecourts.gov.in/hcservices/ is not entitled in law to use the same as such, he is bound to pay the tax as per S.3 of the Taxation Act. If he is genuinely not using the vehicle or not in a position to use the vehicle or not keeping the vehicle in use, he will certainly be entitled to exemption from payment of tax for the period during which the vehicle was not in use if he had furnished the necessary information to the authorities prescribed. In the absence of his taking such action under the relevant rules, the law presumes that he is using the vehicle or keeping it for use. In such cases, he is bound to pay tax as levied under the Taxation Act. It is also to be noted that the tax is paid practically in advance for the period for which the vehicle is to be used. It should, in all cases, be paid within the period prescribed, which happens to be in the beginning of the month, quarter or year. Hence in most of the cases where the vehicle is stopped without being used, the owner will be obliged to ask for refund as he would have already paid the tax for the period. That is why there are provisions for applying for the refund of tax. Those provisions show that when an application for refund is made, he is bound to surrender the licence. A reading of these provisions would lead to the conclusion that unless a person complies with the Rules relating to intimation of withdrawal of the vehicle from service, he is bound to pay tax and he cannot claim exemption therefrom. The burden is always on him to prove that the vehicle has not been used or not kept for use." (Emphasis Supplied) 10. The decision relied on by the learned counsel for the petitioner reported in 1994 WLR 263 (cited supra) is not applicable to the facts of this case as the petitioner therein was having a certificate issued by the Regional Transport Officer regarding non- use of the vehicle which clearly stated that the vehicle was found in stationary condition and the owner was not in a position to use the vehicle. In the said facts of the case, the learned Judge distinguished the judgment reported in 1993 WLR 476 and held that for the said vehicle no tax demand or penalty could be made. In this case no permission to stop the vehicle was obtained by the petitioner from the competent authority as required under Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, 1989. 11. In the light of the decision of this Court reported in 1993 WLR 476 (cited supra) where the facts are identical to this case, the https://hcservices.ecourts.gov.in/hcservices/ contention that the FC was not renewed and therefore the vehicle cannot be used is untenable. The Supreme Court in the decision reported in (2004) 7 SCC 139 (State of Orissa v. Bijaya C. Tripathy) considered the said aspect. In paragraphs 7, 10, 13 and 14, the Supreme Court held thus, "7. Thus under Section 10 if a person is not intending to use a motor vehicle for any period then intimation has to be given along with an undertaking and the documents mentioned therein have to be handed over to the Taxation Officer. Sub-section (3) makes it very clear that in the absence of any undertaking under sub-section (1) it shall be presumed that the motor vehicle has been used or kept for use within the State. 10. The High Court also appears to have misread Section 66 of the Motor Vehicles Act. All that Section 66 of the Motor Vehicles Act provides is that the owner of a motor vehicle cannot use the vehicle as a transport vehicle in any public place without a permit. Section 66, therefore, merely prevents use of the vehicle as a transport vehicle without a permit. It does not prohibit driving of such a vehicle on a public road. The vehicle can be driven on a public road so long as it is not used as a transport vehicle. To take an extreme example, the owner of such a vehicle may use that vehicle for taking his family out for a picnic. Section 66 will not bar such a use. It is thus clear that even in the absence of a permit the vehicle remains a transport vehicle which is capable of being used on a road so long as the vehicle has a valid certificate of fitness and a valid registration certificate. In such cases it has to be presumed that such a vehicle has been “kept for use” irrespective of whether or not it was actually used on the road. 13. In this case it is admitted that the respondent had never given intimation under Section 10. He had not paid the tax. Thus the question of refund does not arise. As he had not given intimation it is to be presumed that his vehicle had been used or kept for use within the State. 14. It was submitted that intimation could not be given under Section 10 as, along with the undertaking, the permit also had to be https://hcservices.ecourts.gov.in/hcservices/ surrendered. It was submitted that as the respondent did not have a permit he could not surrender a non-existing document and could not thus avail of the provision of Section 10. We see no substance in this submission. If the respondent did not have a permit all he had to do was to so state in the intimation. His so stating there would have been sufficient and he would have been required to surrender only the other documents mentioned in Section 10." In the decision reported in (2004) 7 SCC 135 (Commissioner, Transport-cum-Chairman v. Tapan Kumar Biswas) the Supreme Court considered similar issue arising out of Orissa Motor Vehicles Taxation Act, 1975, particularly Section 3 and 10. Section 3 of the said Act deals with levy of tax and Section 10 deals with prior intimation of temporary discontinuance of use of a vehicle. In paragraphs 7 to 11 the Supreme Court held as follows, "7. Thus, under Section 3 tax has to be paid on every motor vehicle used or kept for use within the State. If a transport vehicle has a certificate of fitness as well as a valid certificate of registration then that vehicle will be presumed to have been kept for use. However, this does not mean that a vehicle which does not have a certificate of fitness and/or a certificate of registration is not capable of being used on the road. Merely because, legally, a vehicle cannot be plied on the road without a certificate of fitness and/or the registration certificate would not mean that all such vehicles are not capable of being used on the road. Under the Act, the owner of the vehicle has to pay tax. That is why Section 10 provides that whenever any motor vehicle is intended not to be used on the road for any period, the registered owner or person having possession or control thereof has to give an undertaking duly signed and verified in the prescribed form and manner and the Taxing Authority must be given intimation about the period the vehicle is intended not to be used and the place where the motor vehicle is going to be kept. The relevant documents including the registration certificate, fitness certificate, permit and tax token, etc. are to be delivered to the Taxing Officer. The undertaking contemplated by Section 10 can only be for a period of one year at a time. Thus, it is clear that such an https://hcservices.ecourts.gov.in/hcservices/ intimation and undertaking has to be given from year to year if the vehicle is intended not to be used on the road for more than one year. If no intimation, as required under Section 10 along with the undertaking, has been given, then by virtue of sub-section (3) of Section 10, it will be deemed that the vehicle had been used or kept for use within the State. 8. In this case, admittedly, during the initial period the required intimation and undertaking had been filed. But for the subsequent periods the undertaking has not been filed and intimation not given. The undertaking filed for the initial period would not operate beyond the period of one year. As no subsequent undertaking was filed, it has to be presumed that the vehicle had been used or kept for use within the State. The High Court was not right in concluding that merely because the certificate of fitness was cancelled, it could not be said that the vehicle had been kept for use in the State. 9. Our view is supported by a decision of this Court in Mahakoshal Tourist v. State of M.P. In this case, the vehicle had been registered in Madhya Pradesh but was plying out of the State for a long period. Tax was demanded on that vehicle by the State of Madhya Pradesh. A submission that tax was not payable as the vehicle had not been used in the State was negatived. It was held that mere non-use of the vehicle was not sufficient. This Court held that in order to avoid tax liability the fact of non- use of the vehicle had to be declared to the authority concerned. 10. A similar view has also been taken in an unreported judgment of this Court dated 26-2-2004 in Civil Appeal No. 3599 of 1998. In this case, the vehicle had not been used as a stage carriage permit had not been granted. The submission that without the stage carriage permit, the vehicle could not be used and, therefore, there was no liability to pay tax was not accepted. This Court held that under Section 10 of the Orissa Motor Vehicles Taxation Act, in the absence of any undertaking and intimation it had to be presumed that the vehicle had been used or kept for use within the State." https://hcservices.ecourts.gov.in/hcservices/ 12. In this case there is positive proof that the vehicle was not used for the period from 17.1.2003 to 9.4.2003. No authority under the Motor Vehicles Act has given any certificate or report to that effect. The vehicle was not having an FC for that period, cannot be the proper answer. The permission sought for to stop the vehicle was not granted by the respondent by order dated 13.3.2003 and 20.1.2004. Thus it is evident that the petitioner has not satisfied the statutory provisions for not paying the tax. When liability to pay tax is established, payment of penalty for non- payment, is automatically attracted. 13. Applying the above decisions to the facts of this case, I hold no case is made out to interfere with the impugned demand. There is no merit in the writ petition and the writ petition is dismissed. No costs. Connected miscellaneous petition is also dismissed. sd/- Asst.Registrar /True copy/ Sub.Asst.Registrar vr To The Regional Transport Officer, Dharmapuri. W.P.No.2723 of 2006 SGL (CO) GSK 15.07.2010. https://hcservices.ecourts.gov.in/hcservices/