2017 (1) TMI 1782 - HC - Indian Laws

Registration of vehicle in question in the name of the petitioner - rejection on the ground that the certificate of road worthiness in Form No. 22 which was required to be produced from the manufacturer has not been produced and also on the ground that the amount of tax due and payable for the earlier period has not been paid by the petitioner - HELD THAT - So far as the refusal to register the vehicle in the name of the petitioner on the ground that the petitioner had not produced the certificate issued by the manufacturer in Form No. 22 is concerned, it is required to be noted that as such the petitioner had produced the certificate of the manufacturer in Form No. 22A. Such a certificate was required to show that the vehicle is roadworthy. If the vehicle is sent for bodybuilding work outside the place of the manufacturer, in that case such a certificate is required to be issued in Form No. 22A, which is required to be signed and issued by the manufacturer as well as bodybuilder. However, the purpose and object is to see that the certificate of road worthiness is issued. In the present case it is the case on behalf of the petitioner that vehicle in question was never send to bodybuilder for any bodybuilding work outside. Therefore, the certificate of road worthiness in Form No. 22 only was required - it can be said that the requirement of producing the certificate of road worthiness has been complied with. Under the circumstances in the facts and circumstances of the case the RTO authority is not justified in refusing to register the vehicle in the name of the petitioner on the aforesaid ground. Demand of tax due and payable on the vehicle from the petitioner - HELD THAT - Once the vehicle was transferred by the financier to another person, in that case considering section 3(1) of the Act, 1958, the liability to pay the tax on such vehicle will arise. Sub-section (1) of section 3 provides that there shall be levied and collected on all motor vehicles used or kept for use in the State, a tax at the rates fixed by the State Government, by notification in the Official Gazette. Therefore, the moment the possession of the vehicle was handed over to the purchaser who took the loan from the financier and was put to use the liability to pay the tax arise. Proviso to sub-section (1) of section 3 shall be applicable only in a case where the vehicle is kept by a dealer or manufacturer of such vehicles, for the purpose of trade, there shall be levied and collected annually such amount of tax not exceeding ₹ 5000 as the State Government may, by notification in the Official Gazette specify on those motor vehicles only which are permitted to be used on the roads in the manner prescribed by rules made under the Motor Vehicles Act, 1988. Meaning thereby such a dealer/manufacturer is permitted to use the vehicle for limited purpose of repair but not permitted to use on road. Such an eventuality is not there in the present case. Section 4(1) of the Act, 1958 provides that the tax is required to be paid in advance by every registered owner, or any person having possession or control, of such motor vehicles. Section 8 of the Act, 1958 provides that if the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof, and such person before having paid the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall also be liable to pay the said tax to the Taxation Authority - it cannot be said that the respondent authority had committed any error and/or acted illegally and/or de hors the provision of the Act, 1958 demanding the tax due on such vehicles. The decision of the Division Bench of this Court in the case of Mono Steels (India) Ltd. 2010 (2) TMI 1300 - GUJARAT HIGH COURT also shall not be applicable to the facts of the case on hand. In the case before the Division Bench admittedly the subsequent purchaser purchased the vehicle in a public auction as scrap and therefore, considering section 2(28) of the Motor Vehicles Act, 1988, it was held that the Scrap Road Mobile Crane cannot be said to be a motor vehicle inasmuch as it cannot be used on roads by its owners by its own mechanical power and is not meant for transportation on road. Under the circumstances, the said decision also shall not be applicable to the facts of the case on hand. The impugned order passed by the authority in not registering the vehicle on the ground that the petitioner had not produced the certificate in Form No. 22 is hereby quashed and set aside and it is observed and held that as the petitioner had produced the certificate of road worthiness issued by the manufacturer in Form No. 22A, in the facts and circumstances of the case, such condition is treated to have been complied with - Application allowed in part.

Summary

Issues Involved:
1. Refusal to register the vehicle due to the lack of a certificate of road worthiness in Form No. 22.
2. Demand for payment of outstanding motor vehicle taxes amounting to ?2,40,000.

Issue-Wise Detailed Analysis:

1. Refusal to Register the Vehicle Due to Lack of Certificate of Road Worthiness in Form No. 22:
The petitioner challenged the refusal by RTO authorities to register the vehicle on the grounds that the certificate of road worthiness in Form No. 22 was not produced. The petitioner argued that the vehicle had not undergone bodybuilding work outside, and thus, the manufacturer issued a road worthiness certificate in Form No. 22A by mistake. It was contended that both Form No. 22 and Form No. 22A essentially serve the same purpose of certifying road worthiness. The court noted that the petitioner had indeed produced a certificate of road worthiness in Form No. 22A, which should be considered as compliance with the requirement. Thus, the RTO authority was not justified in refusing to register the vehicle on this ground.

2. Demand for Payment of Outstanding Motor Vehicle Taxes Amounting to ?2,40,000:
The petitioner also contested the demand for payment of outstanding taxes for the period when the vehicle was repossessed by the financier. The petitioner argued that the financier, being a dealer, was not liable to pay taxes beyond what was prescribed under Section 3 of the Gujarat Motor Vehicles Tax Act, 1958. The court, however, held that once the vehicle was transferred and put to use, the liability to pay taxes arose under Section 3(1) of the Act. The financier could have applied for non-use of the vehicle to avoid tax liability, but no such application was made. Therefore, the liability to pay the tax continued, and the subsequent purchaser (petitioner) was liable for the unpaid taxes under Section 8 of the Act. The court dismissed the petitioner's contention and upheld the demand for ?2,40,000 in taxes.

Conclusion:
The court partially allowed the petition, quashing the refusal to register the vehicle on the ground of not producing the certificate in Form No. 22, considering the submission of Form No. 22A as sufficient compliance. However, the court dismissed the petition regarding the tax demand, affirming the petitioner's liability to pay the outstanding taxes. The rule was made absolute to the extent of the registration issue and discharged for the tax demand issue.