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2021 (1) TMI 304 - HC - Indian LawsRecovery of additional tax - whether the petitioner is liable to pay the tax as demanded from him and as confirmed by the Appellate Authority and whether the denial of benefit of Rule 22-A of Uttar Pradesh Motor Vehicles Taxation Rules, 1998 was a valid exercise of power? - HELD THAT - A plain reading of the Taxation Act and the Rules makes it clear that incidence of tax is use of the vehicle and the time for payment of the tax is specified under Section 9 of Motor Vehicles Taxation Act, 1997. Thus, for imposition of tax, it is essential to establish that the vehicle is in use . Interestingly, under section 12 of the Taxation Act, specific provisions have been provided for the contingency where the operator and the owner of the motor vehicle does not intend to use his vehicle for a period of one month or more, in fact, a perusal of Section 12(2) provides for the procedure also wherein the owner or the operator is only to surrender the certificate of registration and token, if any, to the Taxation Officer and in fact, a bar is imposed from imposition of the tax or additional tax in respect of such vehicle for the period during which the vehicle remains withdrawn from use and the aforesaid documents remains surrendered with the Taxation Officer. Proviso to the said Section 12(2) confers a power on the Taxation Officer to impose the tax or the additional tax, in the event, the vehicle is found to be plying during the period when the documents as mentioned in Section 20(2) of the Act remains surrendered. Thus, a plain reading of Section 12 shows that a complete Code is prescribed .A conjoint reading of Section 12 (2) and Rule 22(4), relied upon by the counsel for the respondents make it clear that an additional action is to be performed by the owner if non-use of the vehicle is for more than three calendar months. It is clear that the date of manufacture of the vehicle is 1992 and the validity of the registration is 20 years and the fact that the fitness certificate of the vehicle has never been extended after 13.4.2009 and no fitness certificate has been granted thereafter, in terms of the mandate of the Motor Vehicle Act, the vehicle itself could not have been used as the same would have been in violation of the express mandate of Sections 55 and 56 of the Motor Vehicles Act. The stand of State is that although specific information was given by the petitioner for cancellation of registration, however, the State has taken a plea that as the petitioner failed to move an application after the expiry of three months for extension of surrender of registration in terms of Rule 22(4), the petitioner was liable to pay the demand on account of tax and additional tax from the period 01.12.2010 to 31.10.2012 and for a subsequent period from 01.11.2012 to 30.4.2013 - A perusal of the said order dated 11.2.2014 makes it clear that the applicability or the benefit of Rule 22-A to the facts of the case were never considered by the Taxation Officer. It is clear that once the operator/owner of the vehicle informs regarding surrender of registration certificate, a burden is cast upon the Taxation Officer to charge the tax and the additional tax only on being convinced that the vehicle is found plying as no tax can be levied in terms of Section 12(2) of the Motor Vehicles Taxation Act - Even otherwise admittedly the registration comes to an end after the expiry of 20 years, as admittedly, the vehicle was manufactured in the year 1992, the period of 20 years would expire in the year 2012 and thus no tax could have been imposed after the expiry of the said 20 years. As such the order of the Taxation Officer imposing tax for the period 01.11.2012 to 30.4.2013 amounting to ₹ 47,196/- is liable to be set aside to the extent of charging tax for the period 1.1.2013 to 30.4.2013. As regards the demand of tax amounting to ₹ 1,59,620/- for the period 01.12.2010 to 31.10.2012, the mater is remanded to the Taxation Officer to consider the grant of benefit under Rule 22-A of the Taxation Rules after making such enquiry as he may deem fit in terms of mandate of Rule 22-A. The writ petition is partly allowed.
Issues Involved:
1. Liability of the petitioner to pay motor vehicles tax. 2. Applicability of Section 59 of the Motor Vehicles Act, 1988 regarding the life of the vehicle. 3. Applicability of Section 56 of the Motor Vehicles Act, 1988 regarding the fitness certificate. 4. Recovery of tax under Section 20(2) and 20(3) of the Uttar Pradesh Motor Vehicles Taxation Act, 1977. 5. Requirement of demand in the prescribed form under Section 20(3) of the Motor Vehicles Taxation Act, 1997. 6. Application of Rule 22-A of the Uttar Pradesh Motor Vehicles Taxation Rules, 1998 for writing off tax arrears. Issue-wise Detailed Analysis: 1. Liability of the Petitioner to Pay Motor Vehicles Tax: The petitioner challenged the order demanding ?1,59,620 for the period 01.12.2010 to 31.10.2012 and ?47,196 for the period 01.11.2012 to 30.4.2013 as motor vehicles tax. The petitioner argued that the vehicle was unfit and sold to a scrap dealer, and all relevant documents were surrendered. The court noted that the Taxation Officer did not consider the applicability of Rule 22-A, which allows for writing off tax arrears if the vehicle is destroyed or rendered permanently incapable of use. 2. Applicability of Section 59 of the Motor Vehicles Act, 1988: The petitioner argued that in terms of Section 59, the life of the vehicle (20 years) is a relevant factor for determining tax liability. The vehicle was manufactured in 1992, thus its life ended in 2012, and no tax could be imposed after that. The court agreed that no tax could be imposed after the expiry of 20 years, setting aside the tax demand for the period 01.01.2013 to 30.4.2013. 3. Applicability of Section 56 of the Motor Vehicles Act, 1988: The petitioner contended that without a fitness certificate, the vehicle could not be deemed validly registered. The fitness certificate was not granted after 13.4.2009, implying deemed non-registration. The court acknowledged that the vehicle could not have been used without a fitness certificate, aligning with the mandate of Sections 55 and 56 of the Motor Vehicles Act. 4. Recovery of Tax under Section 20(2) and 20(3) of the Uttar Pradesh Motor Vehicles Taxation Act, 1977: The petitioner argued that recovery should first be made against the vehicle before issuing a recovery certificate against the owner. The court found this argument fallacious, noting that Section 20(3) allows demand from the owner or operator without first resorting to the vehicle. 5. Requirement of Demand in the Prescribed Form under Section 20(3) of the Motor Vehicles Taxation Act, 1997: The petitioner argued that the demand was not raised in the prescribed Form E-1, making the recovery invalid. The court deemed minor infractions in formality insufficient to nullify the liability. 6. Application of Rule 22-A of the Uttar Pradesh Motor Vehicles Taxation Rules, 1998: The petitioner emphasized Rule 22-A, which allows for writing off tax arrears if the vehicle is lost, destroyed, or rendered permanently incapable of use. The court noted that the Taxation Officer and the Appellate Authority did not consider this rule. The court remanded the matter to the Taxation Officer to consider the benefit under Rule 22-A, directing the petitioner to present relevant documents. Conclusion: The court partly allowed the writ petition. It set aside the tax demand for the period 01.01.2013 to 30.4.2013 and remanded the matter to the Taxation Officer to reconsider the tax demand for the period 01.12.2010 to 31.10.2012 under Rule 22-A, directing the petitioner to appear with relevant documents for a fresh decision.
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