2016 (10) TMI 557 - HC - Indian Laws

Payment of motor vehicle tax, penalty and interest - the petitioner is plying a Deluxe service vehicle - Held that - Stage Carriage services are either Ordinary or Express and Deluxe. The seating arrangement of a tourist vehicle provided under Rule 128 of the Central Rules applies to the Deluxe buses, i.e., Deluxe services by virtue of Rule 158 (2) of the Rules of 1994 and the rate of tax per seat in respect of such Deluxe services are provided in the first Schedule of the Taxation Act. Therefore, in order to make any permit holder liable to pay tax per seat applicable to a Deluxe bus, the vehicle has to provide for seating arrangement and other features in accordance with Rule 128 of the Central Rules and Rule 158 (2) & (3) of the Rules of 1994. However, on perusal of the Traffic Inspector s verification report, it would clearly appear like noon day that the petitioner s vehicle has seating capacity of 2 x 3 and not two and two or one and two or one and one on either side, as provided under Rule 128(10)(ii) of the Central Rules. When the petitioner s permit is not issued for Deluxe service nor the vehicle is designed to have seating arrangement of a deluxe vehicle, the petitioner is not liable to pay tax for Deluxe services, therefore, the impugned demand deserves to be set aside. Whether a service can be classified as Deluxe service only on the ground that the seats in the vehicle have push back or reclining facility. It appears, there is no such provision that only on such facility being available in a vehicle it can be classified as a Deluxe service. What Rule 128 (iii) of the Central Rules provides for is only one of the requirements of seating arrangement for a tourist vehicle and that is not the only requirement for classifying a vehicle as tourist vehicle. Even otherwise, the impugned demand notice has been issued without making any assessment in accordance with the procedure prescribed under Rule 8-A of the Taxation Act. - Decided in favour of assessee

Summary

Issues:
1. Classification of petitioner's vehicle as Deluxe service.
2. Applicability of tax for Deluxe Stage Carriage services.
3. Validity of impugned demand notice.

Issue 1: Classification of petitioner's vehicle as Deluxe service:
The petitioner, holding an inter State regular permit for Ordinary Stage Carriage services, was directed to pay tax for a Deluxe service vehicle. The Traffic Inspector's report alleged that the petitioner was plying a deluxe service, leading to the demand notice. However, the petitioner argued that the vehicle did not fall within the Deluxe classification under Rule 116 of the Rules of 1994. The inspection report indicated a seating capacity of 2 x 3, not meeting the specific requirements for a Deluxe vehicle as per Rule 128 of the Central Rules.

Issue 2: Applicability of tax for Deluxe Stage Carriage services:
The judgment referred to Rule 158 of the Rules of 1994, stating that the seating arrangement specified for tourist vehicles under Rule 128 of the Central Rules applies to Deluxe buses. The rate of tax for Deluxe services is provided under the Taxation Act. The court emphasized that to be liable for tax as a Deluxe bus, the vehicle must adhere to the seating arrangement requirements outlined in the rules. Since the petitioner's vehicle did not meet the criteria for a Deluxe service, the court held that the tax for Deluxe services was not applicable.

Issue 3: Validity of impugned demand notice:
The court noted that the demand notice was based solely on the presence of push back or reclining seats in the petitioner's vehicle, without following the proper assessment procedure under Rule 8-A of the Taxation Act. The judgment highlighted that having push back seats alone does not automatically classify a vehicle as Deluxe service. As the demand notice lacked a proper assessment and the vehicle did not meet the requirements for Deluxe classification, the court set aside the impugned demand notice.

In conclusion, the High Court ruled in favor of the petitioner, setting aside the demand notice for payment of tax as a Deluxe service vehicle. The judgment emphasized the importance of adhering to specific classification criteria and proper assessment procedures under the relevant rules and regulations.