IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.M.SHAFFIQUE MONDAY, THE 12TH DECEMBER 2011 / 21ST AGRAHAYANA 1933 WP(C).No. 28343 of 2006(Y) -------------------------- PETITIONER(S): ---------------------- ABDURAHIMAN.K., S/O. MOIDEENKUTTY, KAPPAN HOUSE, KADALIMADU P.O., VADUVANCHAL. BY ADV. SRI. K. V. GOPINATHAN NAIR RESPONDENT(S): ------------------------ 1. THE REGIONAL TRANSPORT OFFICER, WAYANAD, KALPETTA, REPRESENTED BY ITS SECRETARY. 2. P. D. BABU, S/O. DEVASSIA, PACHICKAL HOUSE, CHELLAMCODE, VADUVANCHAL. 3. THE TAHSILDAR (RR), AMBALAVAYAL, WAYANAD. R1 & R3 BY GOVT. PLEADER SRI. P.I. DAVIS THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PN WP(C).No. 28343 of 2006(Y) APPENDIX PETITIONER'S EXHIBITS EXT. P1 COPY OF THE AGREEMENT EXECUTED BETWEEN THE PETITIONER AND THE 2ND RESPONDENT DATED 24.02.2001. EXT. P2 COPY OF THE NOTICE INITIATED UNDER REVENUE RECOVERY ACT DATED 19.07.2006. EXT. P3 COPY OF THE MEMO DATED 19.04.2006. EXT. P4 COPY OF THE REPLY FILED BY THE PETITIONER IN RESPONSE TO EXT. P3 AND REQUESTING WITH REGARD TO THE ENQUIRY REGARDING THE EXISTENCE OF THE VEHICLE DATED 29.07.2006. EXT. P5 COPY OF THE LETTER OF THE 1ST RESPONDENT ORDERING NECESSARY ENQUIRY WITH REGARD TO THE EXISTENCE OF THE VEHICLE DATED 25.08.2006. RESPONDENT'S EXHIBITS : NIL /TRUE COPY/ P. A. TO JUDGE PN A.M.SHAFFIQUE, J. ----------------------------------------------------------- W.P.(C) No. 28343 of 2006 – Y ----------------------------------------------------------- Dated this the 12th day of December, 2011 J U D G M E N T Petitioner who alleges that he had transferred his stage carriage by Ext.P1 agreement files this writ petition praying for the following reliefs: “(i) To call for the records leading to the case and quash Ext.P2 by issuance of a writ of certiorari or any other appropriate writ, direction or order. (ii) To declare that the petitioner is not liable to pay any amount by way of tax from 24.2.2001 in respect of stage carriage KL- 12/2700. (iii) To issue a writ of mandamus or any other appropriate writ, direction or order directing the 1st respondent to complete the investigation proceedings initiated as per Ext.P5 to exclude the petitioner from the liability of tax in respect of stage carriage KL- 12/2700, in the interest of justice”. 2 W.P.(C) No.28343/2006-Y 2. Ext.P2 revenue recovery proceedings have been initiated against the petitioner for recovering an amount of Rs.1,94,460/- being the tax arrears from 1.6.2004 to 30.6.2005 in respect of the said vehicle. According to the petitioner, he had already transferred the vehicle by an agreement Ext.P1 on 24.2.2001 and thereafter the registration certificate was not changed in the name of the subsequent owner. The permit also was in the name of the petitioner. Ext.P3 is a memo issued for tax dues from 1.7.2005 to 31.3.2006. The petitioner thereupon submitted Ext.P4 representation. According to the petitioner, by Ext.P5 dated 25.8.2006, the Regional Transport Officer had intimated the Joint Regional Transport Officer to make necessary arrangements to conduct a detailed enquiry of the vehicle and to forward a specific report about the vehicle, since there was a contention that the vehicle had been dismantled by the end of June, 2004. If that be so, according to the petitioner, there is no tax liability. It seems that no further investigation is conducted in the matter. 3. The 1st respondent has filed a counter affidavit inter alia contending that the action for recovery is legal since the 3 W.P.(C) No.28343/2006-Y registered owner is under obligation to pay the tax arrears. It is the contention of respondents that submission of G-form for the period from 01.7.2004 to 30.6.2005 itself would show that the vehicle was not dismantled, and hence there is no basis for the claim for exemption. 4. It is the case of the petitioner that when an enquiry is ordered by the Regional Transport Officer by Ext.P5, without completing such an enquiry, the action initiated for recovery of the amount allegedly towards tax arrears is bad in law, whereas, on the other hand, the stand of the respondents is that there is no illegality in the action taken by the Department and that Ext.P5 has been issued in the light of Ext.P4 representation. 5. The learned counsel appearing for the petitioner Sri.K.V.Gopinathan Nair also contended that as per the Scheme of the Kerala Motor Vehicles Taxation Act, 1976 (hereinafter referred to as the Act) and the Rules framed thereunder, if tax is assessed and demanded the assessee has got a right of appeal and in the present case there has been no such assessment of tax and therefore the petitioner did not get an 4 W.P.(C) No.28343/2006-Y opportunity to file appeal against the said demands. According to the counsel, the liability to pay tax arises only when the vehicle is operated, used or kept in use in the State. If on enquiry, it is found that the vehicle has been dismantled, there is no obligation to pay any tax. 6. In, Kunji Mohammed v. R.T.O., Malappuram [2000 (1) KLT SN 68 (C.No.78)], it is held that the primary liability to pay tax on the vehicle is on registered owner and if the vehicle is in the possession of anybody else and if the owner does not pay it, the department or the tax recovery officer can proceed against that person as well. But the liability of the registered owner who had so transferred the ownership or possession of the vehicle to pay the tax does not cease at all by reason of such transfer of ownership or possession. Hence merely because the petitioner alleges that he has transferred the Vehicle he is not automatically absolved from the obligation to pay tax under the Act. 7. Then the question is whether the demand made in Ext P2 and P3 suffers from any infirmity especially when a claim for exemption from payment of Tax is made and when it is alleged 5 W.P.(C) No.28343/2006-Y that the Vehicle was dismantled. No doubt, the levy is on every motor vehicle used or kept for use in the State. If the registered owner disputes the liability as no tax is payable on such motor vehicle either by claiming exemption under sub-section (1) of Section 5, or that the Vehicle was not being used in the State, then the incidence of payment of Tax doesnot arise. The relevant provisions for claiming exemption from payment of Tax reads as follows: “S. 5 Exemption from tax: (1) In the case of a motor vehicle which is not intended to be used or kept for use during the first month or the first and second months of a quarter, or the whole of a quarter or year, as the case may be, the registered owner or the person having possession or control of such vehicle shall give previous intimation in writing to the Regional Transport Officer from whom the endorsement for tax has been obtained, that such vehicle would not be used for such period and thereupon, the registered owner or such other person shall not be deemed to have used or kept for use the vehicle for such period, and no tax shall be payable in respect of such vehicle for such period. 6 W.P.(C) No.28343/2006-Y (2) Nothing in sub-section (1) shall exempt a person from liability to pay tax in respect of a motor vehicle, if, on verification, it is found that the motor vehicle, has been used during such period or any portion thereof. (3) Notwithstanding anything contained in sub- section (1), in an appeal under S.23 or a revision under S.24, the burden of proving that a motor vehicle has not been used during any period shall be on the registered owner or the person having possession or control of the motor vehicle, aa the case may be. “ "Rule 10. Exemption from tax (S.5 (1)): (1) The previous intimation referred to in sub- section (i) of S.5 shall be made to the Regional Transport Officer concerned in Form G or in writing with the particulars required therein so as to reach him within one week from the date of commencement of the period for which exemption from payment of tax in respect of the vehicle is claimed due to non-use. (2) On receipt of the intimation, the 7 W.P.(C) No.28343/2006-Y Regional Transport Officer concerned shall certify, after such verification as may be deemed necessary, the non-use of the vehicle for the period for which tax is not payable, by making necessary endorsement in the certificate of registration of the vehicle. Note: The previous intimation referred to in this rule shall be sent by registered post acknowledgment due or presented to the office of the Regional Transport Officer, in person and in the latter case, acknowledgment for its receipt, shall be obtained.” It is held by a Full Bench of this Hon'ble Court in R.K.V. MOTORS AND TIMBERS (P) LTD. v. REGIONAL TRANSPORT OFFICER [1982 KLT 166 (F.B.)] “ Though the Act stipulates prior intimation in respect of a period to entitle an operator to exemption, the Rules have largely relaxed the rigour of the section. It will be evident that under R.10 (extracted earlier) it will be sufficient if intimation is given within a period of one week from the commencement of the quarter in respect of which exemption is claimed. The statutory rule making authority 8 W.P.(C) No.28343/2006-Y having thus relaxed the otherwise stringent provision in the section, it would be sufficient for an operator to claim exemption from tax, if intimation is given after the commencement of the period in respect of which exemption relates. The outer limit for submission of such intimation is one week after the commencement of the period for which exemption is claimed. We hold, and we proceed on the basis, that any operator who gives intimation within a week of the commencement of the period in respect of which exemption is claimed will be entitled to such exemption, notwithstanding the insistence on a prior intimation in terms of the section." 8. That apart when the statute provides for a right of appeal and revision neccessarily such an oppurtunity should be given to the assessee. No further steps are also taken in pursuance of Ext.P5. Hence it is neccessary that an enquiry is conducted in the matter and further an oppurtunity should be given to the petitioner to challenge the demand if any. Pending such an enquiry Ext. P2 and P3 are liable to be set aside. 9 W.P.(C) No.28343/2006-Y 9. Under these circumstances this writ petition stands allowed with the following directions: a) Exts. P2 and P3 are setaside. b) The first respondent shall conduct an enquiry as stated in Ext.P5, and after enquiry if it is found that any tax is payable by the petitioner, a fresh demand may be made, and the petitioner shall be given an oppurtunity to avail the statutory remedies. A.M.SHAFFIQUE, JUDGE rka