2009 (7) TMI 1164 - HC - VAT and Sales Tax

Demand for payment of entry tax as contemplated in the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990 - Whether the entry tax has to be paid on the full value of the new vehicle being registered, irrespective of the fact whether the chassis was purchased in Tamil Nadu or elsewhere and it has already suffered sales tax? Held that - While upholding the order of the third respondent dated October 10, 1994 insofar as its decision that the whole of the vehicle is liable to be assessed under the Act for the purpose of levy of entry tax is concerned, if the appellant is aggrieved against the rate of tax applied in the impugned order, it is open to the appellant to work out its remedy by filing an appeal before the appropriate authority constituted under section 6 of the Act, within a period of 15 days from the date of receipt of a copy of this order.

Issues Involved:
1. Liability for payment of entry tax on a vehicle chassis purchased in Tamil Nadu and subsequently modified outside the state.
2. Determination of the purchase value for the purpose of entry tax.
3. Applicability of decisions from other High Courts.
4. Appellant's right to appeal against the rate of tax applied.

Detailed Analysis:

1. Liability for Payment of Entry Tax:
The appellant purchased a heavy vehicle chassis in Tamil Nadu, paid the necessary sales tax, sent it to Bombay for mounting a special tank, and brought it back to Tamil Nadu. The issue arose whether the appellant was liable to pay entry tax on the entire vehicle, including the chassis and the tank. The court clarified that the entry tax must be paid on the full value of the new vehicle being registered, irrespective of whether the chassis was originally purchased in Tamil Nadu or elsewhere. The fully built vehicle is considered a new commodity liable for new registration under the Motor Vehicles Act.

2. Determination of Purchase Value:
The court examined various provisions of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990, particularly sections 2(a), 2(b), 2(d), 2(g), 2(i), and 2(k). It concluded that the body mounted on the chassis is considered an "accessory" under section 2(a) and its value must be included in the purchase value of the motor vehicle under section 2(k). The appellant, being an "importer" as defined under section 2(g), is liable to pay entry tax on the combined value of the chassis and the tank.

3. Applicability of Decisions from Other High Courts:
The appellant cited decisions from the Allahabad, Andhra Pradesh, and Punjab and Haryana High Courts to argue that the body built on the chassis should be treated independently for tax purposes. However, the court found that the definitions and provisions in the Tamil Nadu Act differ significantly from those considered in the cited cases. Consequently, the decisions from other High Courts were deemed inapplicable to the present case.

4. Appellant's Right to Appeal Against the Rate of Tax Applied:
The appellant contended that the rate of tax applied was incorrect and should be corrected. The court noted that the appellant has the right to appeal against the rate of tax under the Act. Given that the appellant had diligently challenged the impugned order within the prescribed time and had the benefit of interim stay, the court permitted the appellant to file an appeal regarding the rate of tax within 15 days from the date of receipt of the court's order, provided the appellant complies with the condition of paying the entire amount of tax with penalty, if any, as required under section 13(3) of the Act.

Conclusion:
The court upheld the third respondent's order dated October 10, 1994, determining that the entire vehicle is liable for entry tax. The appellant was allowed to appeal against the rate of tax applied within a specified period. The writ appeal was dismissed, and all miscellaneous petitions were also dismissed with no costs.

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