IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 14TH DECEMBER 2009 / 23RD AGRAHAYANA 1931 WP(C).No. 5222 of 2005(V) ------------------------- PETITIONER(S): --------------- A.K.C. VELAYUDHAN, S/O. CHOYI, AGED 85 YEARS, ANJANEYA NIVAS, NEAR RAILWAY GATE, KANHANGAD. BY ADV. SMT.SUMATHY DANDAPANI, SENIOR ADVOCATE RESPONDENT(S): --------------- THE REGIONAL TRANSPORT OFFICER, KASARAGOD. GOVERNMENT PLEADER MR. K.P.PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 5222/2005 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 : TRUE EXTRACT COPY OF REGISTRATION CERTIFICATE IN RESPECT OF STAGE CARRIAGE KL 14/C 9292 ISSUED ON 04.01.2005 BY THE ADDITIONAL REGISTERING AUTHORITY, KANHANGAD. EXHIBIT P2 : TRUE COPY OF PAGE NO. 14 OF THE REGISTRATION CERTIFICATE OF STAGE CARRIAGE KL 14/C 9292. EXHIBIT P3 : TRUE COPY OF THE NOTICE NO. C2/9940/04/K DATED 26.07.2004 ISSUED BY THE RESPONDENT. EXHIBIT P4 : TRUE COPY OF THE REPRESENTATION DATED 16.08.2004 FROM A.K.SAROJINI, WIFE OF THE PETITIONER TO THE RESPONDENT. EXHIBIT P5 : TRUE COPY OF COMMUNICATION C.NO.C2/9940/04/K DATED 08.12.2004 ISSUED BY THE RESPONDENT TO THE PETITIONER. /TRUE COPY/ P.A. TO JUDGE. CR P.R. RAMACHANDRA MENON, J. ----------------------------------------------- WP(C) No. 5222 of 2005 -------------------------------------- Dated, this the 14th day of December, 2009 J U D G M E N T Whether the tax payable in respect of the motor vehicle, a stage carriage, is to be fixed on the basis of the 'seating capacity' or on the basis of the 'actual seats' provided therein (particularly when the vehicle was initially registered in some other State with lesser number of seats; whereas on re-registration in Kerala, the vehicle is found to have the actual 'seating capacity' to a higher extent, in view of the relevant rules) is the issue involved in this Writ Petition. 2. The stage carriage bearing No. KL 14/C 9292 was originally registered in the State of Karnataka, in the name of one B.K.Viswanath of Prasad Motors; from whom, the same was purchased by the wife of the petitioner on 11.12.2001. But when the vehicle was brought over to Kerala and sought to be re-registered here, the registering authority in Kanhangad refused to re-register the vehicle which forced her to approach this Court by filing OP 14994/2002, leading to the judgment reported in 2002 (3) KLT 72. 3. As per the dictum therein, it was held by this Court that, the WP(C) No. 5222 of 2005 2 refusal on the part of the registering authority (pointing out the higher 'seating capacity' in view of the measurements of the 'wheel base' as per Rule 269 of the Kerala Motor Vehicles Rules 1989) was not correct or sustainable, as the reason given was in no the way connected with the issue of re-registration of the vehicle as contemplated under Section 47 of the Motor Vehicles Act, 1988, read with Rule 54 of the Central Motor Vehicles Rules. This Court observed that the instance of re-registration, when a vehicle is brought forth into the State from some other State, is specifically dealt with under Section 47 of the Act and the procedure to be followed is prescribed in Rule 54 of the Central Rules. It was held that the registering authority was bound to effect the re-registration of the vehicle and that the issue regarding higher element of tax payable by the owner, based on the 'seating capacity' of the vehicle as prescribed under Rule 269 of the Kerala Motor Vehicles Rules, would be relevant only at the time of issuance of the 'permit' and not at the time of re- registration. Accordingly, the registering authority was directed to re-register the vehicle in the name of the petitioner in the said case (wife of the petitioner in the present Writ Petition) and thus the re-registration was effected, allotting the present number to the vehicle. Subsequently, the vehicle was transferred again to the name of the petitioner, with effect from 22.08.2003. All the way, the petitioner’s wife as well as the petitioner have been effecting the tax at the rate of Rs.26,700/- per quarter, based on the actual number of seats ('41+2'). WP(C) No. 5222 of 2005 3 4. While so, during the course of auditing, it was observed that the vehicle was having a higher 'seating capacity' and as such, there was “short collection” of tax from September, 2002 onwards; particularly since as per Rule 269, the vehicle in the instant case, having a wheel base of '519.5 cm', was to have a minimum seating capacity of '50'; subject to the extent of reduction by two seats as stipulated in the proviso thereunder. Accordingly, Ext.P3 notice was issued to the wife of the petitioner, referring to the factual position involved in the “short collection” of tax and pointing out that, the tax was liable to be paid in respect of the seating capacity of '46+2', at the rate as prescribed. 5. In response to Ext.P3 notice, Ext.P4 reply was submitted by the wife of the petitioner, stating that she had already transferred the vehicle to Mr. A.K. Velayudhan (her husband and the petitioner in the present Writ Petition) with effect from 22.08.2003; that the vehicle was originally registered in Karnataka with the seating capacity of '41+2'; no material alteration was effected in the vehicle either before or at the time of re registration in Kerala or ever since thereafter and hence that she was not liable to effect any payment as demanded. On receipt of Ext.P4 explanation, the position was examined in detail and the respondent issued Ext.P5 notice to the petitioner asking him to clear the liability in conformity with the Rule 269 of the Kerala Motor Vehicles Rules, directing to clear the balance tax payable from the date of permit, i.e., WP(C) No. 5222 of 2005 4 from 07.09.2002 onwards and asking him to provide '46+2' seats in the vehicle; which in turn is under challenge in the present Writ Petition. 6. The respondent has filed a statement seeking to sustain the factual as well as legal aspects involved. Referring to the very same judgment sought to be relied on by the petitioner (2002 (3) KLT 72), it is contended by the respondent that the issue decided therein was with regard to the question of 're-registration' and that the right to collect the tax (referring to the mandate under Rule 269) was held as very much available for the departmental authorities at the time of issuance of the 'permit'. 7. Smt.Sumati Dandapani, learned Senior Counsel appearing for the petitioner submits that, the issue already having been finalized by virtue of the pronouncement of the verdict reported in 2002 (3) KLT 72 (case filed by the petitioner’s wife, when the vehicle was standing in her name at that point of time), it was no more open to the respondent to have issued Ext.P3 or P5 notice under any circumstance. It is also pointed out that by virtue of the clear stipulation under Section 7 of the Kerala Motor Vehicles Taxation Act, the instance for collecting any 'additional tax' will arise only in cases where any 'alteration' is effected to the vehicle; which instance is conspicuously absent in the case of the petitioner, as the vehicle was having a seating capacity of '41+2' at the time of initial registration in Karnataka and the said position has not been altered in any manner even after the vehicle was brought over to WP(C) No. 5222 of 2005 5 Kerala and was re-registered here. The learned Government Pleader, in response to the said submission, contends that, Section 7 of the Taxation Act is not at all attracted to the case in hand; it being not a case of collection of any 'additional tax'; but a case of “short collection” involving the step for collection of escaped tax as contemplated under Section 26. Reliance is also placed on the decision rendered by this Court in Gopalakrishnan Vs. Joint RTO, Aleppey [1997 (1) KLT 386] holding that 'loss to revenue' is a valid ground for refusal of the permit to have the vehicle operated with 'reduced number' of seats. 8. As noted already, re-registration of the vehicle brought into the State of Kerala is dealt with under Section 47 of the Motor Vehicles Act, 1988 (the 'Act' mentioned as Motor Vehicles Act, “1939” in the decision reported in 2002 (3) KLT 72 could be an inadvertent mistake, in place of the Motor Vehicles Act, “1988”) and the procedure in this regard is prescribed under Rule 54 of the Central Motor Vehicles Rules. But the liability to pay tax is on the basis of the stipulation under Rule 269 of the Kerala Motor Vehicles Rules, 1989 which is extracted below. Rule 269. Minimum seating capacity of stage carriage:- (1) The minimum seating capacity of a stage carriage shall be directly proportionate to the wheel base of the vehicle. In all stage carriages the minimum number of seats to be provided shall be as shown in column (2) of the table below, leaving it to the operator to increase the capacity consistent with other rules relating to seating capacity and with due regard to the type of WP(C) No. 5222 of 2005 6 chassis on which the body is fitted. Wheel base Minimum seating capacity 254 to 293 cm. 16 294 to 305 cm. 20 306 to 343 cm. 25 344 to 407 cm. 30 408 to 432 cm. 35 433 to 496 cm. 40 497 to 505 cm. 45 506 to 550 cm. 50 above 550 cm. 55 Provided that such minimum number may be reduced by two seats in the case of a stage carriage with separate entrance and exit: Provided also that such minimum number so reduced may be reduced further by one fifth in the case of stage carriages operating as City/Town Service. [Provided also that such minimum number shall not apply to luxury service and super deluxe service]. [Provided also that in every stage carriage, all the seats shall be arranged in configuration of either 3x2 or 2x2 or a combination of both, leaving the gangway at the middle, throughout the length of passengers compartment and that the rear most row of seats shall also be of the same configuration as other seats]. (2) In all stage carriages [x x x] all seats shall face to the front. WP(C) No. 5222 of 2005 7 (3) Sub-rule (1) shall not so apply to a stage carriage registered before the commencement of these rules but when its body is reconstructed at any time it shall provide the maximum number of seats possible in the existing body, to the satisfaction of the registering authority subject however to the minimum required under sub-rule (1) and without reducing the existing number of seats. (4) Sub-rule (2) shall not so apply to a stage carriage registered before 01.04.1969, but when its body is reconstructed at any time the seats shall be so arranged as to face to the front. (5) In all stage carriages, twenty five percent of the seats, excluding those provided for the driver and conductor, shall be set apart for ladies. (6) The seats so set apart shall be in the front portion of the passengers compartment. (7) Sub-rule (6) shall not so apply to a stage carriage registered before 01.08.2002. (8) In a stage carriage registered before 01.08.2002 and having only one door in the rear, the seats for ladies shall be set apart in the rear portion of the vehicle. But when its body is re- constructed at any time in the manner provided in sub-rule (1) of rule 280, the seats for ladies shall be set apart as provided in sub-rule (6). 9. By virtue of the above rule position, it is very much clear that in the case of a vehicle having a wheel base of 510.5 cm as in the instant case, the minimum seating capacity provided is '50'; subject to the eligible deduction as stipulated in the proviso thereunder. It was in the said circumstance, that the petitioner was required vide Ext.P5, to provide a seating capacity '46+2' (instead of 41+2 as it exists) and to pay tax accordingly. Obviously, the constitutional validity of the said Rule is not under challenge in the Writ WP(C) No. 5222 of 2005 8 Petition and as such, the liability to pay tax in conformity with the said Rule is not open to challenge,for the petitioner. 10. With regard to the issue as to whether the tax is to be paid on the basis of the 'actual seats' provided or on the basis of the 'seating capacity', it has been made clear by a Division Bench of this Court in Joint RTO, Alwaye Vs. Joshi [1996 (1) KLT 196] that both these terms are different concepts. Referring to the decision rendered in Muraleedharan Pillai Vs. RTO, Kollam [1992(1) KLT 726], it has been held that the owner cannot seek to reduce the seating capacity as he likes and that the department is very much at liberty to refuse such reduction, as the loss of revenue in this regard would be a valid ground for such refusal. The position of law is also made clear in the decision rendered by another Division Bench of this Court in RTO, Palakkad Vs. Kuttikrishnan [1993 (1) KLT 636] and by yet another Division Bench in 1997 (1) KLT 386, (while considering the scope of Section 52 of the MV Act, 1988, holding that the owner of the vehicle cannot alter the vehicle as he likes and the 'seating capacity' cannot be reduced, making it clear that such request can very well be rejected on the ground of 'loss to the revenue'. In the above circumstance, the contention raised by the petitioner that the vehicle which was registered and operated in the State of Karnataka with the seating capacity of '41+2' is liable to be permitted to be operated in the same manner in the State of Kerala as well (since there is no alteration of the vehicle), is not WP(C) No. 5222 of 2005 9 liable to be accepted under any circumstance. 11. Learned Senior counsel for the petitioner further assails Ext.P3 and P5 notices, pointing out that they do not come within the purview of the Section 7 of the Motor Vehicles Taxation Act. The said provision is extracted below:- S.7. Payment of additional tax. When any motor vehicle in respect of which tax has been paid is altered, used or proposed to be used, in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable, the registered owner or the person having possession of control of such vehicle shall pay an additional tax of sum equal to the difference between the tax already paid and the tax which is payable in respect of such vehicle for the period for which the higher rate of tax is payable in consequence of its being so altered or used or proposed to be used, and the licensing officer shall not grant a fresh tax licence in respect of such vehicle so altered or used or proposed to be used until such amount of tax has been paid. Obviously, the situation contemplated under Section 7 of the Taxation Act is in respect of an instance where alteration of the vehicle is involved. True, in the instant case, the existing seating capacity of '41+2' (as it existed when the vehicle was registered in Karnataka) was not sought to be altered in any manner, when it was sought to be re-registered in the State of Kerala. But going by the undisputed facts and figures, particularly in view of the contents of Ext.P3 notice issued by the respondent, the reference made is to the “short collection” of tax for the period in question; which shows that, it is never a case of realisation of 'additional tax due to alteration'. The actual WP(C) No. 5222 of 2005 10 position as to the factum of 'short collection' is rather very much known to the petitioner as well, in view of the specific reference made in this regard in the opening sentence of paragraph 5 of the Writ Petition. This being the position, it is not for the petitioner to take a ‘U turn’ and contend that, the said notice has been issued to collect 'additional tax', coming within the purview of Section 7. 12. As rightly pointed out by the learned Government Pleader, this is a case which squarely comes within the purview of Section 26 of the Motor Vehicles Taxation Act, which provides for the collection of 'escaped tax'. Section 26 stipulates as follows: S.26. Escaped assessment:- If, for any reason, the whole or any portion of the tax which would have been payable in respect of any motor vehicle under the Kerala Motor Vehicles Taxation Act, 1963 (24 of 1963) or under the Kerala Motor Vehicles (Taxation of Passengers and Goods) Act, 1963 (25 of 1963) or under this Act for any period has escaped assessment, the Taxation Officer may, at any time within, but not beyond, ten years from the expiry of that period, assess the tax which has escaped assessment after issuing notice to the registered owner or the person having possession or control of the motor vehicle and making such inquiry as he may consider necessary. Provided that in computing the period of limitation for the assessment of tax under this section, the periods if any, during which assessments has been stayed by an order of any court shall be excluded. From the sequence of events noted already, it is explicitly clear that at the time of issuance of the 'permit' with effect from 07.09.2002, the actual tax WP(C) No. 5222 of 2005 11 payable based on the seating capacity of the vehicle as stipulated under Rule 269 of the Kerala Motor Vehicles Rules, 1989 was not worked out or collected; which mistake was brought to light only subsequently, during the course of audit. It was accordingly, that the respondent issued Ext.P3 and P5 notices requiring the owner of the vehicle to provide '46+2' seats on the basis of the vital statistics of the vehicle with reference to the 'wheel base' as contemplated under Rule 269 of the Motor Vehicles Rules and to clear the balance tax payable in this regard. The action pursued by the respondent is perfectly within the four walls of the law and it is not assailable under any circumstance. In the above facts and circumstances, the challenge raised against Ext.P5 fails. Interference is declined and the Writ Petition is dismissed accordingly. P. R. RAMACHANDRA MENON JUDGE dnc