2013 (3) TMI 159 - HC - VAT and Sales Tax

Incidence of Tax - assessee claimed exemption on chassis - chassis purchased by assessee No.1 in the State of Madhya Pradesh at Raipur and the same was brought in the State of Maharashtra effecting its entry, the bus body was mounted on the said chassis which was entered into the State of Maharashtra and the vehicle was registered with the registration authorities of State of Maharashtra bearing registration No. MH31M5270 - Held that - The chassis was bought at Raipur and effected its entry in the State of Maharashtra for causing it to be driven on public road and as such the Assessment Officer has rightly levied the tax on the purchase value of the chassis. There is also considerable merit in her submission that the Tribunal has totally lost sight of the fact that the term motor vehicle refers to and defines in the Act namely the Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987 as well as the Motor Vehicles Act, 1988 defines motor vehicle inclusive of the term chassis . Unable to accept the submission of the respondent No.1 that as the chassis was consumed by mounting a bus body on it and resulting bus being a different product, respondent No.1 was not entitled to pay any taxes. As decided in Automotive Manufacturers (P) Ltd. etc. .v. Government of Andhra Pradesh and others etc. (1971 (11) TMI 145 - SUPREME COURT) merely because bodies were going to be attached by the ultimate purchasers, it cannot be said that the running of the chassis on the roads of Andhra Pradesh would attract exemption. The Apex Court also turned down the submission of seeking exemption on the ground that the chassis would be meaningless unless body is attached to it. Taking into consideration the observations of the Hon ble Apex Court, dealing with the word use as referred to its meaning in Oxford Dictionary as well as in Webster s Comprehensive Dictionary, the argument advanced by respondent No.1 in support of his submission that as the chassis was consumed in mounting of the bus body on it and as such this different product is not entitled for any tax, is unacceptable. Conjoint reading of section 2(1)(i) and section 3(1) of the Act makes it abundantly clear that the purchase value of motor vehicle means not of the value of only the chassis but of the entire composite vehicle (chassis having a body built thereon) entering the State of Maharashtra - the Circular dated 05.10.2001 refers to the motor vehicle and the definition refers to it in the Circular is inclusive of chassis of motor vehicle. No hesitation to say that the Tribunal failed to appreciate the facts of the matter in proper perspective - the order passed by the first appellate authority are confirmed - against assessee.

Summary

Issues Involved:
1. Levy of entry tax on chassis purchased outside the state and brought into Maharashtra.
2. Definition and interpretation of "motor vehicle" and "chassis" under relevant tax laws.
3. Applicability of the term "consumption" in the context of entry tax.
4. Validity of the Tribunal's order and the subsequent assessment orders.

Detailed Analysis:

1. Levy of Entry Tax on Chassis:
The core issue revolves around whether entry tax is applicable on a chassis purchased outside Maharashtra and brought into the state. The respondent purchased a chassis in Madhya Pradesh and brought it into Maharashtra, where it was used to mount a bus body and subsequently registered. The Entry Tax Officer levied tax on the chassis, which was contested by the respondent through various appeals.

2. Definition and Interpretation of "Motor Vehicle" and "Chassis":
The court examined the definitions under the Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987, and the Motor Vehicles Act, 1988. Both Acts include "chassis" within the definition of "motor vehicle." The court emphasized that "motor vehicle" includes chassis, and thus, the entry of the chassis into Maharashtra for use on public roads justified the tax levy. The court cited the Supreme Court judgment in Automotive Manufacturers (P) Ltd. v. Government of Andhra Pradesh, which held that a chassis could be taxed even if a body was not yet attached.

3. Applicability of the Term "Consumption":
The respondent argued that the chassis was "consumed" in the process of mounting the bus body, resulting in a different product, and thus should not be taxed. The court rejected this argument, stating that the term "use" in the context of the Act includes the entry and use of the chassis on public roads. The court noted that the term "consumption" was added to Section 3(1) of the Act by an amendment in 2012, but this did not change the applicability of the tax on the chassis as the key term "use" remained intact.

4. Validity of the Tribunal's Order and Subsequent Assessment Orders:
The Tribunal had set aside the orders of the lower authorities, directing a refund of the tax paid by the respondent. The court found that the Tribunal erred in its judgment by not properly appreciating the facts and the law. The court upheld the original assessment order by the Entry Tax Officer and the first appellate authority, confirming the tax levy on the chassis.

Conclusion:
The court allowed the petition, quashing the Tribunal's order and reinstating the assessment order dated 15.02.2007 and the first appellate authority's order dated 30.05.2005. The court ruled that the entry tax on the chassis was correctly levied, and the Tribunal's decision to refund the tax was unsustainable. The court emphasized the definitions and interpretations of "motor vehicle" and "chassis," and clarified the applicability of the term "use" in the context of entry tax, aligning with the Supreme Court's precedent.