2018 (10) TMI 100 - HC - Indian Laws

Motor Vehicle Tax - petitioner remitted the Motor Vehicle Tax based on seating capacity, the department insisted it should be based on floor area - Amendment effected through Kerala Finance Bill 2016 - Held that - The motor vehicles registered before 01.10.2017 could pay the tax under the unamended provision - the petitioner can pay the motor vehicle tax under unamended provision - petition allowed.

Summary

Issues:
Interpretation of Motor Vehicle Tax - Seating capacity vs. floor area

Analysis:
The petitioner, a stage carriage operator, faced a dispute with the department regarding the basis for remitting Motor Vehicle Tax, whether it should be calculated based on seating capacity or floor area. The department insisted on the latter due to an amendment introduced through the Kerala Finance Bill 2016. The petitioner, feeling aggrieved, filed a writ petition challenging this demand.

In a significant judgment by a learned Division Bench in the case of State of Kerala v. Mohandas U.K., dated 12th July 2018, the issue was thoroughly considered. The State's argument revolved around the introduction of the "Code of Practice for Bus Body Design and Approval" by the Government of India, resulting in a reduction in seating capacity of stage carriages. This led to amendments in the tax structure to ensure revenue augmentation and tax parity between old and new stage carriages. The amendments aimed to levy tax on new vehicles registered post 18th July 2016 based on floor area, while existing stage carriages registered before this date were to be taxed based on seating and standing capacity as per the previous statute.

The Division Bench clarified that vehicles registered before 1st October 2017 could pay tax under the unamended provision. However, the issue of the applicable rate, whether based on seating capacity or floor area, for vehicles registered after 1st October 2017 was left unresolved.

In the present case, the petitioner's vehicle was registered before 1st October 2017, aligning with the ruling in Mohandas U.K. Consequently, the writ petition was allowed, permitting the petitioner to pay the motor vehicle tax under the unamended provision. The petitioner's counsel further requested that the authority endorse in the Registration Certificate that the tax was collected based on seating capacity, a request that the authorities were directed to fulfill.