- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION No. 8001 OF 2008 Tata Motors Limited, a Company ) Registered under the provisions of ) the Companies Act,1913 and having ) its registered office at Bombay House ) 24, Homi Mody Street, Mumbai -1 and) having an office at Pimpri, Pune-411 018 ... Petitioner Vs. 1. Dy. Regional Transport Officer, ) Pimpri Chinchwad, Pimpri, Pune ) 411 018. ) 2. The Tehsildar, Pune City, ) Tehsildar’s Office, Khadakmal Ali Pune-411 002. ) 3. Police Inspector, Pimpri Police ) Station, Pimpri, Pune-411 018. ) 4. The State of Maharashtra, through) Principal Secretary (Transport), ) Home Department, Government ) of Maharashtra, Mantralaya, ) Mumbai ) - 2 - 5. The Deputy Regional Transport ) Officer, Pune ) 6. The Assistant Regional Transport ) Officer, Pune ) Both the above having their ) Office at Regional Transport ) Office, Pune, near Sangam Bridge) Pune – 411 011. ) ... Respondents Mr. Virag V. Tulzapurkar, Sr. Counsel a/w Abhijeet Marathe i/b M/s. Wadia Ghandy & Co., for the Petitioner. Mr. N. P. Deshpande, AGP for the Respondents. CORAM: D. D. SINHA, AND A. A. SAYED, JJ. CLOSED FOR JUDGMENT ON : JANUARY 11, 2010. JUDGMENT PRONOUNCED ON : MARCH 11, 2010 JUDGMENT [ Per D. D. SINHA, J.]: 1. Heard the learned senior counsel for the petitioner and the learned AGP for the respondents. The petitioner is challenging 173 demand notices (hereinafter referred to as the ‘impugned demand notices”), calling upon the petitioner to pay to respondent No.1 alleged outstanding tax on motor vehicles of the petitioner and - 3 - alleged interest accrued thereon amounting to Rs.97,48,461/-. 2. The petitioner is a Company registered under the Indian Companies Act, 1913 having its registered office at 24 Homi Mody Street, Fort, Mumbai 400 001 and its manufacturing plants, among other places at Pimpri, Chinchwad and Chikhali. Respondent No.1 is the Deputy Regional Transport Officer of Pimpri-Chinchwad, a Taxation Authority appointed under the Motor Vehicles Act, 1988 within whose the jurisdiction the plants and factory premises of the petitioner are situated. Respondent No.2 is the Tahsildar of Pune, city Pune, appointed under the provisions of Maharashtra Land Revenue Code 1966. Respondent No.3 is the Police Inspector of the Pimpri Police Station at Pimpri, Pune. Respondent No.4 is the Appellate Authority, under Rule 28 of the Bombay Motor Vehicles Tax Rules 1959 (hereinafter referred to as the ‘Tax Rules’) against all the orders passed by any Taxation Authority i.e. respondent No.1. Respondent No.5 is the Deputy Transport Officer, Pune and respondent No. 6 is the Assistant Regional Transport Officer, Pune. 3. The brief facts, which have given rise to filing of the petition, are as under- (a) The petitioner is engaged in the business of manufacturing and sale of commercial vehicles and passenger cars at its - 4 - manufacturing plants at Pimpri, Chinchwad and Chikhli, Pune. (b) The petitioner also owns a number of motor vehicles of various kinds such as buses, trucks, jeeps, cars, forklifts etc. in connection with its business. On the date of filing the appeal before respondent No.4, the petitioner had 1417 (one thousand four hundred seventeen) motor vehicles which are registered with the Registering Authority i.e. Regional Transport Office, Pune, under the Motor Vehicles Act, 1988. (c) Out of the total 1417 motor vehicles, the petitioner had been using some motor vehicles exclusively within its factory premises at Pimpri, Chinchwad and Chikhali, Pune (hereinafter referred to as the ‘factory premises’) for the purpose of internal transportation of materials and equipments within its own factory premises and for other purposes necessary and incidental to the manufacturing process. The said motor vehicles are used only within the factory premises. None of these vehicles are taken out of the Factory Premises for other use. The said motor vehicles are never used or kept for use on any of the roads maintained by the State of Maharashtra or local authority or any governmental agency - 5 - (hereinafter referred to as the ‘said Motor Vehicles’). (d) It is further contended that no member of public is given any right to access to the said Factory Premises. The Factory Premises of the petitioner at Pimpri, Chinchwad and Chikhli are spread over an area of about 376.126 and 188 acres respectively. The said Factory Premises are enclosed by compound wall constructed by the petitioner and the ingress and egress is regulated through the gates provided at the respective factories. Only those persons who are authorized to enter are given gate pass by the Security Department of the petitioner. The Security Department can refuse entry at the main entrance in the absence of proper authority. In addition to the Industrial sheds and other structures in the said premises, there are open spaces and roads which are constructed and maintained by the petitioner alone. The said roads within the Factory Premises are neither constructed by nor maintained by the State / Local Authority. The movement of vehicles within the factory premises is also controlled and regulated by the petitioner alone. (e) The petitioner had been duly declaring the ‘non-use’ of the said Motor Vehicles to the Taxation Authority, as provided - 6 - under and in terms of section 3(2) of the Motor Vehicles Tax Act, 1958 (hereinafter referred to as the “Tax Act”) read with Rule 5(1) of the Bombay Motor Vehicles Tax Rules, 1959 (hereinafter referred to as the “Tax Rules”), and pursuant to the said non-use declarations, the Taxation Authority viz. The office of the Regional Transport Office, Pune has from time to time, carried out inspections, granted non-use certificates and has duly exempted the petitioner from payment of tax in respect of the said Motor Vehicles. (f) The petitioner states that said motor vehicles were always rightly granted exemption from payment of tax under the provisions of the Tax Act and Rules framed thereunder. There has been no change of circumstances calling for cancellation or variation or review of the issuance of the ‘non- user’ certificates. The petitioners are entitled to hold the ‘non- use’ certificate in respect of the said motor vehicle. Since the said vehicles continue to satisfy all conditions entitling it continuously to such ‘non-use’ certificates till date. (g) Respondent No.1 vide letter dated March 19, 2005 directed the petitioner to furnish complete information about the motor vehicles belonging to the petitioner, and being used in the said - 7 - Factory Premises. (h) The petitioner vide letter dated March 24, 2005 replied to the said letter of respondent No.1 and provided the list of the motor vehicles owned by the petitioners as well as list of the motor vehicles which were being used by the petitioner exclusively within its Factory Premises and for which ‘non- use’ certificate has been granted by respondent No.1. The petitioner also pointed out in the above letter of 24th March, 2005 that under the provisions of Rule 5 of the Tax Rules, the petitioner had filed ‘non-use’ declarations in respect of the said Motor Vehicles and ‘non-use’ certificates have been granted by the Competent Taxation Authority in respect of the same after verifying the facts stated in the respective ‘non- use’ declarations. (i) It is submitted that respondent No.1 however, called for additional information in relation to the vehicles. The petitioner on 25th March 2005 provided respondent No.1 with additional details of the said Motor Vehicles as required by respondent. (j) Surprisingly, respondent No.1 served on the petitioner 173 separate notices in respect of 150 vehicles, all dated 25th - 8 - March 2005 and alleged that tax on the said motor vehicles had been outstanding and interest had also accrued thereon, although respondent No.1 had never demanded any tax on these vehicles in the past in view of the ‘non-use’ certificates granted by the Competent Authority, in respect of these vehicles, thereby exempting the petitioner from payment of Motor Vehicle Tax on these vehicles. (k) It is contended that said demand notices called upon the petitioner to pay the alleged outstanding tax and interest, amounting to Rs.97,48,461/- on the said 150 Motor Vehicles and also threatened that if the petitioner fails to pay the amount immediately within 3 days the same would be recovered as arrears of land revenue. (l) By the said impugned demand notices, tax was demanded with retrospective effect and that too when the petitioner had obtained valid ‘non-use’ certificates for all the 150 Motor Vehicles. In other words, respondent No.1 had levied tax for the period for which ‘non-use’ certificates under Rule 5 of the Tax Rules have been issued and which were valid, subsisting and in force although respondent No.1 had not come to any finding that the petitioner was not using these vehicles in the - 9 - State and therefore, the impugned demand notices are ex-facie illegal, were in gross violation of Section 3(2) of the Tax Act read with Rule 5(1) of the said Rules. The petitioners were not given opportunity of hearing by respondent No.1 to submit its say before levying the tax on the motor vehicles. In fact not even show-cause notice was issued to the petitioner nor even an explanation of the petitioner was called for before issuing the demand notices and therefore, even the principles of natural justice were not followed before issuing the demand notice. (m) The petitioner was shocked by the illegal demand notices issued by respondent No.1, the manner in which the same was made and threats contained in 173 demand notices dated 25th March 2005. Immediately thereafter petitioner filed 150 appeals against each of the impugned demand notice before respondent No.4, as per the provisions of Section 14 of the Tax Act on the grounds that the impugned demand notices were ex-facie illegal, mala-fide, arbitrary and issued for the sole purpose of some how generating revenue before the end of the Financial year on 31-3-2005 by adopting coercive and highhanded tactics and the impugned notices were issued in - 10 - gross violation of the principles of natural justice. The petitioner made ad-hoc payment of Rs.24,00,000/- without prejudice to his rights and contentions raised in the appeal. Respondent No.4 directed the petitioner to file a consolidated appeal in a particular format in lieu of 156 separate appeals filed by the petitioner, hence, the petitioners have filed consolidated appeal , as directed by respondent No.4. (n) In December 2006 the petitioner again received 15 more demand notices all dated 28th December 2006 addressed by the Assistant RTO (Tax Department) [hereinafter referred to as the “15 Impugned Demand Notices] pertaining 15 vehicles of the petitioners demanding the payment of tax, amounting to Rs.1,97,448/- along with interest at the rate of 2% on these 15 motor vehicles in respect of which Non-use Declarations had been filed by the petitioner. These 15 Demand Notices pertains to 15 vehicles already covered by the 156 appeals but in respect of different tax period viz. From 1st July 2002 to 30th June 2007. After receiving the said 15 Impugned Demand Notices, the petitioner vide their advocate’s letter dated 16th January 2007 pointed out to respondent No.4 the previous developments in the matter and requested for hearing. In the - 11 - mean time, the petitioner filed with the Taxation Authority Non-use Declarations all dated 11th October 2006 in respect of 11 motor vehicles out of the ones covered by the 156 appeals. Such non-use declarations were for the period of five years beginning from 15th January 2007 and ending on 14th January 2012 during which period the said 11 vehicles were not going to be used within the State. The petitioner states that the Taxation Authority had on earlier occasions certified that all vehicles as not being used within the State. (o) It is contended that respondent No.5 by letter dated 5th December 2006 intimated the petitioner that the applications for non-use certificates were rejected as the said Factory Premises were allegedly a public place as per the provisions of the Motor Vehicles Act, 1988, hence, the motor vehicles in respect of which said 11 declarations dated 11th October 2006 were filed by the petitioner were liable to payment of tax. (p) The petitioner aggrieved by the said rejection of the non-use declarations, filed Appeal dated 10th January 2007 before respondent No.4 and challenged the the order dated 5th December 2006 on the ground that the same was contrary to and in violation of the principles of natural justice. - 12 - (q) The petitioner has submitted that (i) 156 appeals dated 28th March 2005, (ii) Review Application dated 17th November 2006, and (iii) Appeal dated 10th January 2007 were all heard by respondent No.4 on 22nd March 2007. Thereafter on 8th November 2008 the petitioner directly received through post an order dated 18th November 2008 passed by respondent No. 4 (hereinafter referred to as the ‘impugned orders’). By the impugned orders, respondent No.4 has dismissed the said 156 appeals filed by the petitioner and has upheld the impugned demand notices issued by respondent No.1. 4. It is case of the petitioner that one of the issues which fell for the consideration of respondent No.4 was whether the said motor vehicles were used or kept for use within the State as envisaged under the provisions of the Tax Act and Tax Rules. Respondent No. 4 by the impugned order dated 14th October 2008 has held that factory premises of the petitioner are “public place” and therefore under Rule 5(1) of the Tax Rules, the petitioner was not entitled to exemption from payment of taxes under the Tax Act. Respondent No.4 has held that factory premises of the petitioner are “public place” as defined under Motor Vehicles Act, 1988 and thus, the said motor vehicles used exclusively on the factory premises of the - 13 - petitioner, are not entitled to be exempted from payment of tax under Rule 5(1) of the Tax Rules, in view of the decision of this Court reported in Pandurang Chimaji Agale Vs. New India Life Insurance Company, [AIR 1988 Bombay 248). 5. The learned Senior Counsel for the petitioner has submitted that the Apex Court in the case – Automobiles Transport Ltd. Vs. State of Rajasthan [1962 SC 1406] while dismissing the petitions, has held that tax of vehicles is compensatory in nature and the same does not create any restriction to free trade and commerce. The constitutionality of the tax on vehicles was thus upheld by the Supreme Court. 6. The learned Senior Counsel for the Petitioner has submitted that the law laid down by the Apex Court in the case of Bolani Ores Ltd. Vs. State of Orissa [AIR 1975 SC 17] is squarely applicable to the present case. It is contended that in the said matter, petitioner therein had challenged the judgment and order of Orissa High Court in First Appeal, upholding the judgment and order of the Trial Court stating that the Dumpers, Rockers and certain other vehicles used by the petitioner therein were ‘motor vehicles’ under Section 2(18) of the Motor Vehicles Act, 1939, and are taxable under the Orissa Motor Vehicles Act, 1939. One of the - 14 - questions before the Hon’ble Supreme Court was whether the said dumpers, rockers and other vehicles of the petitioners therein, though registrable under the Motor Vehicles Act, 1939, are ‘motor vehicles’ for the Orissa Motor Vehicles Taxation Act, 1930. The Apex Court while partly allowing the petition ruled, inter alia that dumpers and rockers though registrable under the Motor Vehicles Tax Act 1939 are not taxable under the Orissa Motor Vehicles Taxation Act, 1930 as long as they are working solely within the premises of the respective owners. The learned Senior Counsel for the Petitioner has submitted that the ratio of the said judgment is squarely applicable to the facts of the present case where the said Motor Vehicles, though registered as such under the Motor Vehicles Act, 1988, are exempt from taxation under the Tax Act and Tax Rules since they operate solely and exclusively within the premises of the Petitioner, and do not use the public roads at all. 7. The learned Senior Counsel for the petitioner contended that similar issue was involved in the case of – Travancore Tea Company Ltd. Vs. State of Kerala [AIR 1980 SC 1546] as to whether the vehicles of the petitioner therein, which were plying exclusively within the premises of the petitioner were liable to be taxed? It is contended that the Supreme Court once again has held - 15 - that the tax is levied on the vehicles only if they use public roads and not otherwise. The learned Senior Counsel for the petitioner further contended that similar legal position is emerging from the another decision of the Supreme Court in the case of – State of Gujarat Vs. Kaushikbhai K. Patel [AIR 2000 SC 2175] . The learned Senior Counsel for the Petitioner therefore, contended that the Supreme Court has consistently held that the tax on vehicles can be levied under the provisions of the Tax Act if and only if the vehicles use public road and not otherwise, since the tax imposed on vehicles is regulatory and compensatory in nature for the purpose of raising revenue to meet the expenditure for making the roads, maintaining them and for regulation of traffic. 8. It is further contended that in the context of Entry 57 of the list II of the Constitution of India, the tax being leviable when the motor vehicle is used or kept for use use on the roads within State, it evidently means the public roads maintained by State or any agency on behalf of the State and therefore, it has been held that where the roads are private roads belonging to a particular person or entity and the vehicles are exclusively used within such private area, such vehicles would not be liable to tax and such vehicles are entitled to get exemption as contemplated under the Act. Even - 16 - though such vehicles were required to be registered as ‘motor vehicles’, the same were not subject to tax. 9. The learned Senior Counsel for the petitioner further contended that the judgment cited by respondent No. 1 have no application to the present case. The petitioner used the Motor Vehicles exclusively within the factory premises of the petitioner which is a private area. The said Motor Vehicles are not taken out of the factory premises for any reason and they are plied, maintained, serviced and even fueled only within the factory premises. The said Motor Vehicles do not use any road, building and/or operated by the State Government or by any other agency of the State Government at any point of time. The Petitioner has been regularly filing the non- use declarations in respect of the said Motor Vehicles since last several years and Respondent No.1 has been certifying the same after conducting the inspection at the said factory premises. The petitioner was rightfully entitled to claim exemption from payment of tax on the said Motor Vehicles during the subsistence of the certification of the non-use-declarations. 10. The learned senior counsel for the petitioner further contended that it is also not the case of Respondent No.1 that the - 17 - said Motor Vehicles are taken out of the factory premises at any point of time or that the petitioners have been plying the said Motor Vehicles in contravention of the certificate of non-use declarations. It is therefore, admitted position that the said Motor Vehicles are not used or kept for use within the State. It is therefore contended that the impugned order dated 18th October 2008 deserves to be quashed and set aside. So also 173 impugned demand notices dated 25th March 2005 (Exhibits “D” and “D-1” to the petition), the impugned order dated 5th December 2006 (Exhibit “I” to the petition), 15 demand notices dated 28th December 2006 (Exhibit “G” and “G-1” to the petition) and the petition deserves to be allowed. 11. The learned AGP on the other hand supported the action of the respondent and contended that the petitioners are liable to pay vehicle tax on for the following reasons - . Section 3 of the Bombay Motor Vehicles Tax Act, 1958 is the charging section. Under this provision tax can be levied and collected on all motor vehicles used or kept for use in the State at the rate prescribed. The motor vehicles in question are used or kept for use in the State as the premises wherein the petitioner claims to have been using the vehicles is the part of the State territory. 12. The learned AGP further contended that though initially - 18 - exemption certificate was issued in respect of the vehicles belonging to the petitioner, tax is sought to be recovered because of provisions of Rule 5 of the Bombay Motor Vehicles Tax Rules which deals with certificate for non-user and the circumstances under which it can be granted. 13. The learned AGP further contended that if a registered owner of or any person who has possession or control of a motor vehicle intends to use it exclusively which is not a public place, then only such a person is entitled to get a certificate for non-user under Rule 5 for the purpose of Section 3(2). Such a certificate holder only is entitled to claim exemption. Under Rule 2(h) of the Motor Vehicles Tax Rules, 1959 words and expressions used but not defined under these rules shall have the meaning assigned to them in the Act or or in the Bombay Motor Vehicles Rules 1959. It is submitted that though the word ‘Public Place’ is not defined under the Rules, it is defined in section 2(24) of the Motor Vehicles Act, 1939. The learned Assistant Government Pleader further submitted that Full Bench of this Court had an occasion to consider the question – whether the premises of the petitioner is a ‘public place’ or not in the case of – Pandurang (supra) . This Court in the said decision has held that it is a ‘public place’. It is submitted that the - 19 - Full Bench while considering the issue relied upon the definition of ‘public place’ stipulated in section 2(34) of the Motor Vehicles Act. The law laid down by the Full Bench squarely applies to the facts of the present case and therefore, the Authorities are justified in not treating the vehicles of the petitioner’s motor vehicle to be eligible to get certificate of non user under Rule 5 of the Bombay Motor Vehicle Tax Rules, 1959. 14. The learned AGP further contended that an owner of the registered motor vehicles or a person in its control is liable to pay vehicle tax regardless of the fact as to whether motor vehicle is actually used on road or not. In view of the law laid down by the High Court in the case of Chief General Manager Jagannath Area and Others Vs. State of Orissa & Anr. [(1966) 10 SCC 676] . 15. The learned AGP further contended that in the case of Union of India & Ors. Vs. Choughule & Co. Pvt. Ltd. [1992 Supreme Court 1376] the Supreme Court in paragraph 6 has observed thus- “... The mere fact that dumpers were used solely on the premises of the owner, or that they were in closed premises, or permission of the Authorities was needed to move them from one place to another, or that they are not intended to be used or are incapable of being used for - 20 - general purposes, or that they have an unladen and laden capacity depending on their weight and size, is of no consequence for dumpers are vehicles used for transport of goods and thus liable to pay a compensatory tax for the availability of roads for them to run upon commission.” 16. The learned AGP in the light of above referred