THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.24438 of 2010 % 19.1.2011 # Raj Kumar Khatri, S/o.Motilal ... Petitioner VERSUS $ The Deputy Commissioner of Transport, Anantapur And another ...Respondents < GIST: > HEAD NOTE: !Counsel for Appellant: Mr. G.Sravan Kumar ^Counsel for Respondents: The Additional Advocate General ? Cases referred 1) AIR 1962 SC 1406 2) AIR 1980 SC 1547 : (1980) 3 SCC 619 3) AIR 1981 SC 774 : (1981) 2 SCC 318 4) AIR 1987 SC 1911 : (1987) 3 SCC 655 5) AIR 1999 SC 2970 : (1999) 7 SCC 400 6) AIR 2004 SC 3894 : (2004) 5 SCC 155 THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.24438 of 2010 January 19, 2011 Between: Raj Kumar Khatri, S/o.Motilal ... Petitioner And The Deputy Commissioner of Transport, Anantapur And another ...Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.24438 of 2010 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner is owner of Tata Indica Car bearing Registration No.KA-01-MC 8332. He had purchased the car in the State of Karnataka with the financial assistance provided by Reliance Capital, Bangalore. He paid life tax of Rs.39,463/- vide challan No.CF/3092133, dated 25.8.2007 and obtained registration of his vehicle from the Assistant Regional Transport Officer, Bangalore (Central). In the Registration Certificate his address is shown as M/s.Mahima Silk Sarees, 12/2/Saibaba Market, O.K. Road, Bangalore which is his cloth business shop. It appears that he also had a branch, of his cloth business, at Puttaparthy, Andhra Pradesh. He, admittedly, regularly visits Puttaparthy for his business. On 16.4.2010 when he was proceeding to Puttaparthy in his car from the workshop at Anantapur, the second respondent checked the vehicle and also his cell phone numbers. In the Vehicle Check Report (VCR), the second respondent alleged that, on enquiry, it was found that the petitioner was residing near Chitravathi Road of Puttaparthy in Anantpur with mobile No.9491355021. It was also alleged that the vehicle was “kept for use” in Andhra Pradesh and, therefore, the petitioner was liable to pay tax under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (the Taxation Act). The first respondent, then issued show cause notice dated 19.4.2010 asking the petitioner to explain within seven days as to why life tax of Rs.32,300/- with penalty of Rs.20,680/- (total Rs.52,980/-) should not be collected from him for plying the vehicle in Andhra Pradesh without payment of the life tax due to the State. The petitioner submitted his explanation on 07.5.2010. He alleged that he is a resident of Karnataka State; he already paid life tax in the State of Karnataka; merely because he got several SIM cards of various States, and he moves throughout India, he cannot be treated as a resident of Andhra Pradesh. Along with the explanation he also made an application for release of his car. On 07.5.2010, the first respondent issued orders directing release of the vehicle on condition of the petitioner depositing a sum of Rs.53,618/- by way of demand draft; to produce the vehicle every Monday; and to file an undertaking that he will not alienate or encumber the vehicle till disposal of the case. The petitioner did not comply with the conditions nor did get the vehicle released. Be that as it is, the first respondent issued final demand notice dated 19.7.2010 confirming the demand of life tax and penalty. The first respondent also recorded a finding that the petitioner was residing in Andhra Pradesh, and though the vehicle was registered in State of Karnataka, he was regularly using the same in the State of Andhra Pradesh. Assailing the demand notice, the petitioner filed the instant writ petition seeking a writ of Mandamus to declare the impugned notice as illegal and arbitrary, and for consequential directions. The petitioner contends that he is a resident of Bangalore and, therefore, life tax on his car cannot be levied and collected under Section 3 of the Taxation Act merely because he is using a local mobile number of Puttaparthy. According to him when once he pays life tax to the State of Karnataka, he is exempted from paying tax in the State of Andhra Pradesh. For this purpose he drawn support from the Government notification vide G.O.Ms.No.601, Home (TR-II), dated 27.3.1963. On our request, the learned Additional Advocate General, Mr.Harinath Gupta, appeared and made submissions. Before dealing with the submissions, it is necessary to notice the defence from the counter affidavit filed by the first respondent. He states that the petitioner intentionally avoided registration of the vehicle in the State of Andhra Pradesh and avoided payment of life tax under Section 3 of the Taxation Act read with Section 40 of the Motor Vehicles Act, 1988 (the MV Act). Therefore the vehicle was seized on 16.4.2010 under Section 8 of the Taxation Act vide VCR No.389132. It was kept in the premises of the Deputy Transport Commissioner, Anantapur. The show cause notice was issued demanding life tax at 9% of the vehicle cost under Section 3 of the Taxation Act, and penalty upto April 2010 under Section 6 read with G.O.Ms.No.318, dated 03.11.2008 at 2% of the life tax. Later, considering the application of the petitioner for release of the vehicle, the application was ordered subject to conditions. The petitioner personally collected a copy of the proceedings dated 07.5.2010 ordering release, but did not comply with the conditions. It is further stated that the petitioner is a resident of Andhra Pradesh. He is residing at Vision Stores, Room No.9, Krishna Building, Chitravathi Road, Puttaparthy. Though the car is registered in Bangalore, the petitioner is using the vehicle in the State of Andhra Pradesh continuously and, therefore, he is liable to pay tax under Section 3 of the A.P. Act. The Counsel for the petitioner made the following submissions. The petitioner is a resident of Bangalore having business there. He visits Puttaparthy in connection with his business at the Branch office. The petitioner produced sufficient evidence to show this, but the same was not considered by the first respondent. Under the provisions of the Taxation Act, and the Andhra Pradesh Motor Vehicles Taxation Rules, 1963 (the Taxation Rules), advance life tax has to be paid at the time of the registration. As registration of the vehicle and payment of advance life tax are complied with in Karnataka, it would enanble the petitioner to use the vehicle any where in India. When any vehicle is moved from the State of registration to another State, the law requires a change of registration within a period of 12 months. In the absence of any allegation that the petitioner’s vehicle was not registered in the State of Andhra Pradesh within the stipulated period, the demand of life tax again on the petitioner’s vehicle is illegal and unconstitutional. The petitioner has not used or kept his vehicle for use in Puttaparthy and, therefore, merely because a mobile phone connection was obtained at Puttaparthy, the same cannot be construed as the vehicle having been used in Andhra Pradesh. The Government issued orders in G.O.Ms.No.601, dated 27.3.1963, in exercise of its powers under Section 9(1), exempting non-transport vehicles of other States from payment of tax and, therefore, the demand made by the first respondent is illegal. Alternatively he submits that the levy of penalty from the date of purchase for a period of 12 months is excessive and illegal. The Additional Advocate General for the State argues that the petitioner is found to be a resident of Andhra Pradesh, and he is using a local mobile phone connection. He avoided registration of the vehicle and payment of tax in Andhra Pradesh and, therefore, he is liable to pay tax under Section 3 of the Taxation Act. Under Section 47(4) of the MV Act, and Rule 96 of the Andhra Pradesh Motor Vehicles Rules, 1989 (the APMV Rules), the owner of a vehicle, not registered in Andhra Pradesh, is required to send information to the Registering Authority of the area in which the motor vehicle is kept. Under Section 47(1) of the MV Act, such vehicle has to be assigned a new registration mark on its removal to another State. The petitioner has contravened these provisions. He nextly contends that when the vehicle is used or kept for use in the State of Andhra Pradesh, the petitioner is bound to pay life tax here, and claim refund of the life tax under the Karnataka Motor Vehicles Taxation Act, 1957. As the petitioner has used the vehicle in Puttaparthy, the taxable event occurred there and, therefore, the impugned order is unassailable. The only issue that arises for consideration, having regard to the background of the case and submissions made across the Bar, is whether the petitioner is liable to pay life tax for the vehicle in question under the Taxation Act, even though the same was registered with the jurisdictional authority in the State of Karnataka. Section 3(1) of the Taxation Act is the charging section. According to the said provision, tax shall be levied on every motor vehicle “used or kept for use, in a public place in the State”. Section 3(2) thereof, with its four provisos, amplifies the charging section stipulating either life tax, quarterly tax or tax for a limited period. Section 4(1)(b) and (bb) of the Taxation Act empowers the Government to grant refund of the tax at such rates as may be notified, “in the case of removal of the vehicle to any other State on transfer of ownership or change of address.” Deviating from the Taxation Act, we may now advert to the relevant provisions of the MV Act. Chapter IV (Sections 39 to 65) deal with registration of motor vehicles. Section 39 requires registration of a motor vehicle without which a person cannot drive a vehicle “in any public place or in any other place.” The vehicle must carry a registration mark displayed in prescribed manner. The only statutory exception is in respect of motor vehicles in possession of a ‘dealer’ which, as defined in Section 2(8) of the MV Act, includes a person who is engaged in building bodies for attachment to chassis; or in the repair of motor vehicles; or in the business of hypothecation, leasing or hire-purchase of motor vehicle. Sections 42 to 46 of the MV Act deal with the method, manner and effectiveness of such registration in India. Here, it is necessary to refer to Sections 46 and 47 of the MV Act, to the extent relevant. 46. Effectiveness in India of registration.—Subject to the provisions of Section 47, a motor vehicle registered in accordance with this Chapter in any State shall not require to be registered elsewhere in India and a certificate of registration issued or in force under this Act in respect of such vehicle shall be effective throughout India. 47. Assignment of new registration mark on removal to another State.—(1) When a motor vehicle registered in one State has been kept in another State, for a period exceeding twelve months, the owner of the vehicle shall, within such period and in such form containing such particulars as may be prescribed by the Central Government, apply to the registering authority, within whose jurisdiction the vehicle then is, for the assignment of a new registration mark and shall present the certificate of registration to that registering authority: Provided that an application under this sub-section shall be accompanied— (i) by the no objection certificate obtained under Section 48, or (ii) in a case where no such certificate has been obtained, by— (a) the receipt obtained under sub-section (2) of Section 48; or b) the postal acknowledgement received by the owner of the vehicle if he has sent an application in this behalf by registered post acknowledgement due to the registering authority referred to in Section 48, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted: Provided further that, in a case where a motor vehicle is held under a hire-purchase, lease or hypothecation agreement, an application under this sub-section shall be accompanied by a no-objection certificate from the person with whom such agreement has been entered into, and the provisions of Section 51, so far as may be, regarding obtaining of such certificate from the person with whom such agreement has been entered into, shall apply. (2) to (4) ……………….. (omitted as not relevant) (5) If the owner fails to make an application under sub- section (1) within the period prescribed, the registering authority may, having regard to the circumstances of the case, require the owner to pay, in lieu of any action that may be taken against him under Section 177, such amount not exceeding one hundred rupees as may be prescribed under sub-section (7): Provided that action under Section 177 shall be taken against the owner where the owner fails to pay the said amount. (6) Where the owner has paid the amount under sub- section (5), no action shall be taken against him under Section 177. (7) For the purposes of sub-section (5), the State Government may prescribe different amounts having regard to the period of delay on the part of the owner in making an application under sub-section (1). Section 47(4) of the MV Act empowers the State Government to make Rules requiring the owner of a motor vehicle not registered within the State, but brought into or is for the time being in the State, to furnish to the prescribed authority such information with respect to the motor vehicle and its registration as may be prescribed. Rule 96 finds place in the APMV Rules, which reads as under. 96. Intimation in respect of vehicles not registered within the State :- Further to the provisions of sub-section (4) of Sec.47, when any motor vehicle which is not registered in this State has been kept within the State for a period exceeding thirty days, the owner or other person in charge of the vehicle shall send intimation to the registering authority of the area in which the motor vehicle is at the time of making the report and shall intimate:- 1) his name and permanent address, and his address for the time being; 2) the registration mark of vehicle; 3) the make and description of the vehicle; and 4) in the case of a transport vehicle, the name of the authority within the State by whom the permit has been issued or countersigned. The detailed procedure for registration of motor vehicles is contained in Rules 33 to 61 of the Central Motor Vehicles Rules, 1989 (MV Rules) and Rules 79 to 129 of the APMV Rules. For this case, these are not relevant. The conspectus of various provisions, with regard to registration of motor vehicles, is as follows. An owner of a motor vehicle shall not ply the same in any public place, or in any other place, unless the vehicle is registered with the Registering Authority in whose jurisdiction such owner has residence or his place of business where the vehicle is normally kept. In cases where the motor vehicle is registered in a State other than in Andhra Pradesh, and is kept or used in Andhra Pradesh for a period exceeding 30 days (as per Rule 96 of the APMV Rules), he shall send an intimation to the Registering Authority. If such owner desires to obtain new registration in Andhra Pradesh, where the vehicle is used or kept for use exceeding 30 days, a new registration has to be obtained in Andhra Pradesh within a period of 12 months, failure of which would attract compounding fee of Rs.100/- under Section 177(7) of the MV Act in lieu of penalties under Section 177 of the MV Act. The provisions in relation to registration or new registration in Andhra Pradesh of a motor vehicle have nothing to do with the interpretation and construction of Section 3(1) of the Taxation Act. The charging section has to be construed strictly. If a vehicle is used or kept for use in a public place in Andhra Pradesh, notwithstanding the provisions relating to registration or new registration, the owner of the vehicle is liable to pay the tax as specified in Section 3(2) of the Taxation Act read with the relevant schedule. Any argument that non- intimation of keeping the motor vehicle in Andhra Pradesh for a period exceeding 12 months under Section 47(1) of the MV Act or non- intimation of the particulars of the vehicle kept within the State for a period exceeding 30 days under Rule 96 of the APMV Rules at best attract penalty and not the motor vehicle tax is unsound. Under the provisions of the Taxation Act, tax can be levied on every motor vehicle “used or kept for use” irrespective of whether a vehicle, registered in another State, has obtained new registration in the State of Andhra Pradesh as contemplated under the provisions referred to herein above. This legal position is well settled. In Automobile Transport Ltd v State of Rajasthan[1], it was categorically held by a seven Judge Constitution Bench of the Supreme Court that “the tax on motor vehicles levied by the States under the law referable to Entry 57 of List II of Schedule VII of the Constitution of India, is a compensatory tax levied for the use of the roads and it is not a tax on ownership or possession of motor vehicles”. The object of the Motor Vehicles Taxation Act is achieved by charging to tax all motor vehicles suitable for use on roads which are used or kept for use in the State. The registered owner or person having possession or control of the motor vehicle is liable to pay the tax in advance to the State where the motor vehicle is used or kept for use. Non-registration of the motor vehicle, liable to tax is not always a deciding factor while deciding the liability to pay the tax. The non- registration of the vehicle in the State even if it is registered in another State would certainly attract penal provisions and, indeed, prohibits the owner from using the vehicle in any public place or any other place in the State where the vehicle is kept for use. In State of Mysore v Sundaram Motors Private Limited[2], a question arose whether new cars and chassis of the respondent, passing through the State of Mysore, were exigible to tax under Section 3 of the Mysore Motor Vehicles Taxation Act, 1957. In that case the transport authorities had demanded tax on the vehicles passing through the territory of Mysore although they were not used there. The dealer of the motor vehicles was successful in their challenge to such action before a Division Bench of the High Court. In the State’s appeal before the Apex Court, the plea was that the vehicles were exigible to tax as they were suitable for use on roads and substantially used on the roads in the State by traversing a distance of 400 miles. The plea was rejected and the appeal was dismissed observing as below. The word “kept” has not been defined in the Taxation Act. We have, therefore, to interpret it in its ordinary popular sense, consistently with the context. The word “kept” has been repeatedly used in the section. In sub-section (1), it occurs in association with the phrase “for use on roads”. In that context, the ordinary dictionary meaning of the word ‘keep in’ is to retain’, ‘to maintain’ or ‘cause to stay or remain in a place’,‘ to detain’, to stay or continue in a specified condition, position, etc.’. In association with the use of the vehicle, therefore, the word “kept” has an element of stationariness. It is something different from a mere state of transit or a course of journey through the State. It is something more than a mere stoppage or halt for rest, food or refreshment, etc., in the course of transit through the territory of the State. Even if the vehicle is suitable for use on the roads or a public place, it would not be exigible to tax if a non-resident remained in the State for a day or two during the course of transit or stops the vehicle for rest, food or refreshment in the course of such transit. In our considered opinion, even if a businessman visits the State for the purpose of his business for few days, without any intention of staying in Andhra Pradesh, it would not fall within the ambit of Section 3(1) nor does it come within the phrase ‘used or kept for use, in a public place in the State’. In Travancore Tea Estates Co. Ltd., v State of Kerala[3] the appellant company, which owned 17 motor vehicles like tractors, trailors and lorries used for agricultural purposes in Tea estates, questioned the liability to pay tax on these vehicles on the ground that they were not used or kept for use on the roads in Kerala State. The learned Single Judge as well as the Division Bench denied the relief. Before the Supreme Court the question was whether on the assumption that the motor vehicles are used or kept for use within the estate, and not intended to be used on public roads of the State, tax is leviable. A three Judge Bench answered the issue in the negative agreeing with the submission of the appellant that, “the tax is only excigible on vehicles used or kept for use on public roads … (and) if the requirement contemplated under the Act is not satisfied the registered owner or person in possession or control of the vehicle would not be entitled to claim any exemption from payment of tax”. In case of dispute whether the motor vehicles are “used or kept for use” in the State how does the “relevant fact in issue” need to be proved? The Supreme Court indicated the burden and requirement of proof in the following passage (para 6). If the words “used or kept for use in the State” are construed as used or kept for use on the public roads of the State, the Act would be in conformity with the powers conferred on the State legislature under Entry 57 of List II. If the vehicles are suitable for use on public roads they are liable to be taxed. In order to levy a tax on vehicles used or kept for use on public roads of the State and at the same time to avoid evasion of tax the legislature has prescribed the procedure. Sub-section (2) of Section 3 provides that the registered owner or any person having possession of or control of a motor vehicle of which a certificate of registration is current shall for the purpose of this Act be deemed to use or keep such vehicles for use in the State except during any period for which the Regional Transport Authority has certified in the prescribed manner that the motor vehicle has not been used or kept for use. Under this sub- section there is a presumption that a motor vehicle for which the certificate of registration is current shall be deemed to be used or kept for use in the State. This provision safeguards the revenue of the State by relieving it from the burden of proving that the vehicle was used or kept for use on the public roads of the State. At the same time the interest of the bona fide owner is safeguarded by enabling him to claim and obtain a certificate of non-user from the prescribed authority. In order to enable the owner of the vehicle or the person who is in possession or in control of the motor vehicle of which the certificate of registration is current to