2017 (10) TMI 1193 - HC - Indian Laws

Tax clearance certificate - petitioner was granted a national permit for a goods vehicle - Held that - The petitioner has not sought for surrender of the national permit, since the permit itself had lapsed on and after 08.01.2017. Therefore, all that is required to be given to the petitioner is a tax clearance certificate. Accordingly, this Writ Petition is allowed, the impugned order is set aside with the direction to the respondent to consider the petitioner s application for the issue of tax clearance certificate and pass appropriate orders in this regard within a period of eight weeks from the date of receipt of a copy of this order.

Summary

Issues:
1. Validity of demand notice for authorization tax after the expiry of the national permit.
2. Interpretation of relevant legal provisions regarding authorization tax.
3. Applicability of previous court judgments on similar issues.
4. Compliance with circular issued by Transport Commissioner regarding surrender of permits.
5. Demand for authorization tax despite the permit lapsing.

Issue 1: Validity of demand notice for authorization tax after the expiry of the national permit

The petitioner, having a national permit for a goods vehicle valid till 08.01.2017, did not operate the vehicle outside Tamil Nadu after 09.01.2013. The petitioner argued that the authorization tax should not be demanded after 08.01.2013, as the national permit had also lapsed. The court referred to a previous judgment where a similar issue was considered, and it was held that if no application for authorization is made, no demand for authorization tax could be sustained. The court found that the demand for authorization tax after the permit expiry was not legally sustainable, and the impugned demand notice was quashed.

Issue 2: Interpretation of relevant legal provisions regarding authorization tax

The court analyzed Section 7 of the Tamil Nadu Motor Vehicles Taxation Act and the rules made thereunder. It was held that the tax defined under the Act is leviable under the Act itself, and Section 7 can only be applied to Tamil Nadu and not to other states. Since the petitioner had paid the tax due to Tamil Nadu, the demand for authorization tax by the respondent was found to be invalid in law. The court emphasized that without a valid legal basis, such demands cannot be upheld, especially when the petitioner had not applied for authorization as required under the Central Motor Vehicle Rules.

Issue 3: Applicability of previous court judgments on similar issues

The court extensively referred to previous judgments where it was held that if no application for authorization is made, no demand for authorization tax could be made. The court cited specific cases where demands for authorization tax were quashed due to the absence of a valid application for authorization. By following these precedents, the court determined that the impugned demand for authorization tax in the present case was not tenable and should be set aside.

Issue 4: Compliance with circular issued by Transport Commissioner regarding surrender of permits

The court considered a circular issued by the Transport Commissioner, directing Regional Transport Officers to accept the surrender of permits without proof of payment of tax if the authorization had expired. The court held that the circular, being issued by the Head of Department, was binding on all subordinate officers, including the respondent. Therefore, the demand for authorization tax was not valid as per the circular, and the respondent was bound to comply with it.

Issue 5: Demand for authorization tax despite the permit lapsing

Although the petitioner did not seek surrender of the national permit as it had lapsed, the court held that all that was required was a tax clearance certificate. The court allowed the writ petition, set aside the impugned order, and directed the respondent to consider the petitioner's application for the tax clearance certificate within eight weeks. The court emphasized that no authorization tax should be demanded in such a scenario.

In conclusion, the court's judgment addressed various legal aspects, including the validity of demand notices, interpretation of legal provisions, compliance with circulars, and the applicability of previous court decisions to the present case. The court provided detailed reasoning based on legal principles and precedents to quash the demand for authorization tax and direct the issuance of a tax clearance certificate to the petitioner.