2006 (11) TMI 559 - HC - VAT and Sales Tax

Levy of Entry Tax - Volvo Hydraulic Excavator - Imported the above referred two excavators - Sec 3 of the Tamil Nadu Tax on Entry of Motor Vehicles Act 1990 - whether an excavator not running on inflated tyres but on iron chain plates such as a caterpillar vehicle or a military tank would be a motor vehicle coming within the meaning of section 2(28) of the Motor Vehicles Act 1988 r/w section 2(i) of the Tamil Nadu Tax on Entry of Motor Vehicles Act 1990? - HELD THAT - The excavator referred to in Bose Abraham s case 2001 (2) TMI 890 - SUPREME COURT was a motor vehicle fitted with inflated tyres and not chain plates like caterpillars or military tanks. The excavator in question in the present case is mounted on iron plates made into chain such as caterpillar vehicles or military tanks. Such an excavator is used for excavating the earth and loading in lorries and it cannot be used upon public roads since the roads would get damaged by the chains. The excavator moves around only in work sites and it is not suitable or adapted for use in public roads. This position is also confirmed by the physical verification carried out by the respondent as seen from his report extracted above. The Kerala High Court in the case of Intelligence Officer Squad No. IV Kozhikode v. Ray Constructions Ltd. 2006 (2) TMI 602 - KERALA HIGH COURT while considering a similar issue has held that the excavators in question having regard to its distinguishing features from the other excavators has to be held as not motor vehicle falling under the definition of the term defined u/s 2(28) of the Motor Vehicles Act 1988 and therefore not liable for entry tax. It is relevant to note that the Volvo excavators purchased by the petitioner which is the subject-matter of levy of entry tax are exactly similar to the excavators which were the subject-matter in the above referred reported decision of the Kerala High Court. Thus the impugned show cause notice cannot be sustained and it is hereby set aside. The writ appeal is disposed of accordingly.

Summary

Issues:
1. Impugned notice alleging non-payment of entry tax on imported excavators.
2. Interpretation of the term "motor vehicle" under relevant laws.
3. Determination of whether excavators are liable for entry tax.

Analysis:
The case involved a writ petition challenging a notice proposing entry tax on imported excavators. The petitioner, engaged in works contracts, purchased Volvo excavators for a specific project. The respondent alleged non-payment of entry tax under the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990. The petitioner contended that the excavators, adapted for specific works like sea protection, were not motor vehicles under the Act's definition.

Upon inspection, it was found that the excavators lacked wheels or tires, operated by a driver, and moved using chains. The petitioner argued that these features made them unsuitable for public roads. The petitioner cited legal precedents, including a Kerala High Court judgment, to support the argument that such excavators should not be considered motor vehicles for tax purposes.

The court analyzed the definition of "motor vehicle" under the Motor Vehicles Act, 1988, which includes vehicles adapted for road use. Legal precedents highlighted the distinction between vehicles with chain plates and those with rubber tires, emphasizing suitability for road use. The court noted that the excavators in question, similar to those in the Kerala High Court case, were not fit for public roads due to potential road damage caused by the chains.

Ultimately, the court ruled in favor of the petitioner, setting aside the notice and concluding that the excavators were not liable for entry tax. The decision was based on the excavators' specific features and their unsuitability for road use, as confirmed by the inspection report. The judgment emphasized the importance of interpreting legal definitions in light of practical considerations and specific characteristics of the vehicles in question.