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Madhya Pradesh High Court · body

2002 DIGILAW 683 (MP)

PARAMJEET SINGH v. STATE OF M. P.

2002-07-18

A.K.MISHRA

body2002
ORDER Arun Mishra, J.—In this writ petition question for decision is determination of Life Time Tax under IInd Schedule of M.P. Motoryan Karadhan Adhiniyam, 1991 (for short "the Adhiniyam of 1991") read with notification issued u/s 21 of the said Adhiniyam and the notification issued by State of M.P. on 21st September, 1993; whether it can be realized as ordered by the Commissioner, Transports on 14-6-2000 as per clarification contained in Annexure P/9 by which he has directed to realize the tax on the present market value of the new vehicle when the life time tax is being paid. Question is whether the market value of the vehicle on the date of original purchase of the vehicle ought to have been made the basis for working out the life time tax payable in accordance with the IInd Schedule to Adhiniyam and notification of State Government issued u/s 21 on 21st September, 1993. 2. Facts giving rise to the writ petition lie in narrow compass. Petitioner Shri Paramjeet Singh purchased 1991 model Mahindra Jeep in public auction held at the Army Headquarter, New Delhi on 13-6-2001 for a sum of Rs. 45,368/- vide documents sale certificate P/1, sale-cum-acceptance letter P/2 and the delivery letter P/3. Certificate P/4 has also been issued to that effect. Vehicle in question has been insured with Oriental Insurance Company Ltd. after its purchase by the petitioner as per document Annexure P/5. Petitioner applied for registration of motor vehicle with the Registration Authority, Jabalpur, M.P. and also for transfer of ownership of vehicle in Form No. 32 which is applicable in case of motor vehicle purchased or acquired in public auction. Petitioner deposited tax of Rs. 300/- as per Annexure P/ 8. Demand was raised from the petitioner to pay the life time tax at the current value of new Mahindra Jeep which was Rs. 3,91,300/- as on 13-6-2001. It may also be mentioned here that in the year 1991 when Govt. of India had purchased the vehicle in question its market value was Rs. 1,18,111.70/- 3. An interim order was passed by this Court on 5-3-2002 directing the respondents to register the vehicle deeming its auction price as the price of the vehicle; tax shall be realizable on that basis. It is submitted that thereafter the vehicle has been registered but ownership has not been transferred in the name of petitioner. 4. 1,18,111.70/- 3. An interim order was passed by this Court on 5-3-2002 directing the respondents to register the vehicle deeming its auction price as the price of the vehicle; tax shall be realizable on that basis. It is submitted that thereafter the vehicle has been registered but ownership has not been transferred in the name of petitioner. 4. The Registering Authority demanded the life time tax on the basis of the price of new vehicle existing as on 13-6-2001 i.e. Rs. 3,91,300/- on the strength of clarification issued by the Transport Commissioner, M.P., Gwalior on 14-6-2000 in which it has been mentioned that IInd schedule of the Adhiniyam, 1991 provides for three percent of the cost of vehicles which is the cost of the vehicle realized by a dealer. Govt. cannot be treated to be a "dealer" for the purpose of working out the cost. The vehicle sold by it in public auction cannot be the trade or business of the State, thus, it cannot be treated as "dealer" within the 1st explanation to item No. II of the IInd schedule of the Adhiniyam. Explanation is applicable only to a dealer carrying on business of sale or purchase under the certificate. In the case of vehicles which have been purchased in the auctions held by the Government the current market value of such a vehicle is to be basis of working out life time tax and then the tax has to be realized at the rates specified in IInd schedule in case a model is of such a make which is not available in the market value of such vehicle should be determined for computation of life time tax on the basis of prevailing market value of vehicle having similar horse power. Such calculation should be made basis of life time tax taking into consideration the notification No. F-22-10-93/eight, dated 21st September, 1993. If tax has been paid in accordance with the notification till the date of acquiring the possession by purchaser adjustment should be given of the amount of tax already paid or 50% of the life time tax whichever is less should be realized. 5. Petitioner submits that the circular Annexure P/9 is contrary to the provisions of the IInd Schedule of Adhiniyam tax could not be demanded at the rate of 50% of the current market price of the vehicle. 5. Petitioner submits that the circular Annexure P/9 is contrary to the provisions of the IInd Schedule of Adhiniyam tax could not be demanded at the rate of 50% of the current market price of the vehicle. P/9 runs not only to the contrary to the notification issued by Govt. of M.P. but also against section 5(2) of the Adhiniyam and its IInd schedule. 6. In the return filed by respondents, it has been contended that tax is levied as per Motor Yan Karadhan Adhiniyam, 1991 according to the provision of said Adhiniyam life time tax on new motor vehicle has to be calculated at the rate of 5% of its purchase price. Since there was no provision with regard to the tax to be realized from old vehicles, therefore, the respondent No. 3 vide circular dated 14-6-2000 directed that life time tax from old vehicles should be realized at the rate of 50% of that which was realized from new vehicles. Accordingly, since at present there are several models being produced by Mahindra and Mahindra Company the lowest costing model being priced at Rs. 3.5 Lacs approximately, therefore, petitioner was required to deposit a sum of Rs. 8,750/- in order to get his vehicle registered as per the prevailing instructions (P/9). The interim order has been complied with but the liability of the petitioner remains for making payment of a sum of Rs. 8,750/-. Circular Annexure P/9 cannot therefore, be termed as arbitrary or illegal; the respondents are obliged to secure revenue to the State exchequer; hence suitable instructions have been issued. 7. Shri. A.G. Dhande learned senior counsel appearing for the petitioner submits that when Government has auctioned the vehicle at Rs. 45,318/-; tax has to be computed on this value only. His alternative submission is that in no case the value of new Mahindra Jeep Rs. 3,91,300/- prevailing on 13-6-2001 could be made the basis by the respondents; at the most the price of new vehicle prevailing in the year 1991 which was Rs. 1,18,111.70 paisa which was the price paid by the Government of India to the dealer ought to have been made the basis for determination of the life time tax as per IInd schedule of Adhiniyam read with notification issued on 21st September, 1993 in exercise of the powers conferred by sub-section (1) of section 21 of the Adhiniyam. 1,18,111.70 paisa which was the price paid by the Government of India to the dealer ought to have been made the basis for determination of the life time tax as per IInd schedule of Adhiniyam read with notification issued on 21st September, 1993 in exercise of the powers conferred by sub-section (1) of section 21 of the Adhiniyam. His submission is while working out the life time tax as per IInd schedule of Adhiniyam to the extent of the amount that ought to have been paid under the 1st schedule of the Adhiniyam had the vehicle has been originally registered and used in M.P. till the date of payment of life time tax shall be deducted from life time tax specified in IInd schedule as per section 5(2) subject to the conditions mentioned in the notification dated 21-9-1993 ought to have been realized. Circular Annexure P/9 is derogatory not only to the provision mentioned in IInd schedule of Adhiniyam but expressly contravenes the notification issued under sub-section (1) of section 21 on 21st September, 1993. 8. Shri R.S. Jha, Learned Dy. Advocate General appearing for the State submits that circular Annexure P/9 carries forward logical consequence emanating from notification issued on 21st Sept., 1993 by Govt. of M.P. under sub-section (1) of section 21 of the Adhiniyam by adopting the mode of calculation of the prevailing market price of new vehicle as on the date of purchase in auction of old vehicle no arbitrariness has been committed since the Government vehicles are exempted from making payment of tax as such some value has to be worked out for payment of life time tax as such the circular P/9 issued by Transport Commissioner is valid and cannot be said to be oppressive in any manner and the demand on the current market value of the vehicle is just and proper. 9. Before adverting to the rival submissions the provisions of M.P. Motoryan Karadhan Adhiniyam, 1991 be noticed. Section 3 of Adhiniyam provides for levy of tax on motor vehicles. A tax shall be levied on every motor vehicle used or kept for use in the State at the rate specified in the First Schedule. 9. Before adverting to the rival submissions the provisions of M.P. Motoryan Karadhan Adhiniyam, 1991 be noticed. Section 3 of Adhiniyam provides for levy of tax on motor vehicles. A tax shall be levied on every motor vehicle used or kept for use in the State at the rate specified in the First Schedule. 1st proviso to sub-section (1) of section 3 makes it clear that in the case of motor cycles with or without attachment, invalid carriages and motor cars, the tax shall be levied at the rates specified in the Second Schedule. This proviso has been amended from September, 2001 to the effect that the motorcycles with or without attachment, invalid carriages, motorcars omnibus for private use having seating capacity exceeding six and upto twelve (excluding driver) and autorickshaw the tax shall be levied at the rates specified in the Second Schedule. Section 3 as it stood before amendment in 2001 is quoted below:- 3. Levy of tax on Motor Vehicles. - (1) A tax shall be levied on every motor vehicle used or kept for use in the State at the rate specified in the First Schedule; Provided that in the case of motor cycles with or without attachment, invalid carriages and motor cars, the tax shall be levied at the rates specified in the Second Schedule; Provided further that in respect of a motor vehicle passing through the State from a manufacturer to a dealer under a temporary certificate of registration for a period not exceeding one month, the rate of tax shall be one third of the tax payable for a quarter. (2) A Transport vehicle of which the certificate of registration is current, shall, for the purposes of this Act, be presumed to have been in use or kept for use, notwithstanding the expiry of the certificate of fitness in case of such transport vehicle. Section 5 deals with payment of tax. It reads as under:- 5. Payment of tax - (1) The tax levied under this Act shall be paid in advance by the owner of the motor vehicle, at his choice, quarterly, half yearly or annually on a token to be obtained by him for that quarter, half year or year, within fifteen days from the commencement of the quarter, half year or year, as the case may be. Tax for a half yearly token shall not exceed twice and tax for an annual token shall not exceed four times the tax for a quarterly token: Provided that the tax shall be paid in respect of a motor vehicle used or kept for use for any period expiring on the last day of a quarter and not exceeding two months, at two thirds of the quarterly tax or one-third of such tax according to the period exceeds or does not exceed one month; Provided further that whenever the rates of tax specified in the First Schedule are enhanced and the owner of a motor vehicle becomes liable to pay the tax at the enhanced rate, then such owner shall deposit the difference of amount of tax at the time of payment of tax for the subsequent period in respect of that motor vehicle. Provided also that the tax levied in respect of a stage carriage plying on a route other than a city route or a contract carriage other than a motor cab shall be paid in advance monthly, quarterly, half yearly or annually within ten days from the beginning of the month, quarter, half year or year, as the case may be. (2) Notwithstanding anything contained in sub-section(1), the tax levied under the first proviso to sub-section (1) of section 3 shall be for the life time of the motor vehicle and shall be paid in advance in lump-sum by the owner; Provided that - (i) in case of a motor vehicle specified in the first proviso to sub-section (1) of section 3 registered in M.P., the total amount of tax paid prior to the commencement of this Act shall be deducted from the amount of life time tax specified in the Second Schedule; (ii) in case of a motor vehicle specified in first proviso to sub-section (1) of section 3 registered in any other State and brought into the State of Madhya Pradesh, an amount of tax that ought to have been paid under First Schedule had the vehicle been originally registered and used in Madhya Pradesh, till the date of payment of life time tax, shall be deducted from the amount of life time tax specified in the Second Schedule. The owner of such vehicle shall furnish No Dues Certificate issued by the Taxation Authority of that State; Provided further that the maximum amount deductible under Clause (i) or (ii) of the first proviso shall not in any case exceed fifty percent, of the amount of life time tax specified in the Second Schedule; Provided also that in case the tax in respect of motor vehicles referred to in the first proviso to sub-section (i) of section 3 has already been paid prior to the commencement of this Act, the life time tax shall be levied after the expiry of the period for which the tax was so paid and such tax shall be paid within one month from the date of the expiry of the said period. 10. Proviso (ii) to section 5(2) makes it clear that in case of a motor vehicle specified in first proviso to sub-section (1) of section 3 registered in any other State and brought into the State of Madhya-Pradesh, an amount of tax that ought to have been paid under First Schedule had the vehicle been originally registered and used in Madhya Pradesh, till the date of payment of life time tax, shall be deducted from the amount of life time tax specified in the Second Schedule. Clause (ii) of 1st proviso to sub-section (2) of section 5 is attracted in the instant case as vehicle was registered in New Delhi. Adjustment has to be given of the amount of tax paid outside State on such a vehicle from the life time tax specified in IInd schedule. 11. Section 21 of the Adhiniyam of 1991 gives the power to the State Government to exempt from tax. It reads as under:- 21. Power of State Government to exempt from tax.-(1) The State Government may, by notification and subject to such restrictions and conditions as may be specified therein exempt in whole or in part any motor vehicles from the payment of tax from such date as may be specified in the notification. (2) Any notification issued under this section may be rescinded at any time and on such rescission the notification shall cease to be in force. A notification rescinding an earlier notification shall have prospective effect. (2) Any notification issued under this section may be rescinded at any time and on such rescission the notification shall cease to be in force. A notification rescinding an earlier notification shall have prospective effect. (3) Every notification issued under sub-section (1) shall be laid on the table of the Legislative Assembly and the provisions of section 24-A of the M.P. General Clauses Act, 1957 (No. 3 of 1958) shall apply thereto as they apply to a rule. 12. A Notification has been issued by the State Government on 21st September, 1993 exercising power under sub-section (1) of section 21 of M.P. Motoryan Karadhan Adhiniyam, 1991 and three categories of the vehicles have been accepted for the payment of amount of life time tax leviable in IInd schedule of the Adhiniyam of 1991 to the extent of the amount of tax that ought to have been paid under 1st schedule of the said Adhiniyam had the vehicle been taxed till the date of acquiring the possession of such vehicle by the private person or fifty percent of the amount of life time tax, whichever is less, subject to the conditions enumerated in the notification. Notification in extenso is quoted below:- Bhopal the 21st Sept., 1993 No. F. 22-10-93-VIII- In exercise of the powers conferred by sub-section (1) of section 21 of the Madhya Pradesh Motoryan Karadhan Adhiniyam. Notification in extenso is quoted below:- Bhopal the 21st Sept., 1993 No. F. 22-10-93-VIII- In exercise of the powers conferred by sub-section (1) of section 21 of the Madhya Pradesh Motoryan Karadhan Adhiniyam. 1991 (No. 25 of 1991), the State Government hereby exempts the following classes of motor vehicles specified in the first proviso to sub-section (1) of section 3 of the said Adhiniyam, namely - (i) Tax exempted motor vehicle of Defence Department purchased by a person; (ii) Tax exempted motor vehicle of Central/State Government purchased by a person; and (iii) Motor vehicle auctioned or sold by any Court as Stolen, seized and/or unclaimed property to a person; from the payment of the amount of life time tax leviable in the Second Schedule of the said Adhiniyam to the extent of the amount of tax that ought to have been paid under the First Schedule of the said Adhiniyam had the vehicle been taxed till the date of acquiring the possession of such vehicle by the private person or fifty percent of the amount of life time tax, whichever is less, subject to the following conditions, namely - (a) A sale-voucher or certificate of sale or auction from the concerned department shall be produced by the owner before the Taxation Authority; (b) the vehicle for which the exemption has been granted should be registered in Madhya Pradesh and; (c) the make and model of such vehicle shall be ascertained on the basis of make and model of similar vehicles of the same type registered. By order and in the name of the Governor of Madhya Pradesh. A.K. Mandlekar, Dy. Secy. 13. Amendment has also been made in IInd schedule of Adhiniyam. In the second schedule for items 1 and 2, the following items have been substituted by Act No. 11 of 1997, namely:- 14. It is clear from the first explanation of Item 2 of IInd schedule that cost of the vehicle means cost realized by the dealer and 5% of the cost of the vehicle has to be taken the basis for computation for determining the life time tax. If IInd schedule is read with notification issued on 21st September, 1993 issued u/s 21(1) of the Adhiniyam, it becomes clear that the notification takes care of the vehicles auctioned by Government departments. If IInd schedule is read with notification issued on 21st September, 1993 issued u/s 21(1) of the Adhiniyam, it becomes clear that the notification takes care of the vehicles auctioned by Government departments. The conditions mentioned in applicability of the notification are three; a sale-voucher or certificate of sale or auction from the concerned department shall be produced by the owner before the Taxation Authority; the vehicle for which the exemption has been granted should be registered in M.P. and the make and model of such vehicle shall be ascertained on the basis of make and model of similar vehicles of the same type registered and from the payment of the amount of life time tax leviable in the IInd schedule of the said Adhiniyam adjustment has to be given of the amount of tax that ought to have been paid under Ist Schedule of the said Adhiniyam had the vehicle been taxed till the date of acquiring the possession of such vehicle by a private person or fifty percent of the amount of life time tax, whichever is less. 15. When the circular P/9 read juxta-posed to the notification issued u/s 21(1) of the Adhiniyam it leaves no room for doubt that the circular P/9 though reiterates that principle mentioned in the notification issued on 21st September, 1993 has to be followed, however, that runs contrary to the first explanation to item 2 of IInd schedule of the Adhiniyam; first explanation makes it clear that the cost of the vehicle is to be the one which is "realized by a dealer". In the instant case, the cost paid by the Government of India to the dealer in the year 1991 was admittedly Rs. 1,18,111.70 paisa for purchase of new Mahindra Jeep. As the exemption has been granted to the Government of India vehicles from payment of tax, the notification takes care of such an exigency and adjustment of the amount of tax which ought to have been paid but for such exemption has to be made on deeming basis. While arriving at life time tax of the vehicle held by a Government, adjustment is to be given of the tax which ought to have been paid under 1st schedule or 50% of the amount of life time tax which ever is less. 16. While arriving at life time tax of the vehicle held by a Government, adjustment is to be given of the tax which ought to have been paid under 1st schedule or 50% of the amount of life time tax which ever is less. 16. The instructions issued by Transport Commissioner, M.P. directing realization of the life time tax on the current market value as on the date of auction is absolutely illegal, arbitrary and impermissible it contravenes section 5(2), proviso to section 3(1) and the provision made in IInd schedule of Adhiniyam; by no stretch of interpretation it can be said that realization of a life time tax can be allowed on a value of a vehicle for which it was never sold in the market or purchased, whether sale is by a dealer or by State Government or in an auction by a private person, it is not open, in my opinion, to realize the life time tax on the current market value of the new vehicle of said make. The value for which it was sold and purchased at the time when it was sold first by a dealer to the Government has to be the basis for computation of the life time tax under IInd schedule. The first explanation to item 2 of IInd schedule makes it clear that cost of the vehicle means cost realized by a dealer. Instructions issued by Transport Commissioner ignores and overlooks the said price paid to dealer, thus, instructions P/9 are held to be contravening explanation 1 to item 2 of IInd Schedule of Adhiniyam and, thus, cannot be allowed to stand. Life time tax has to be worked out by the Registering Authority on the basis of notification issued on 21st September, 1993 and for that purpose the value of the vehicle has to be taken as was paid by the Govt. of India in the year 1991 when it purchased the vehicle from dealer at Rs. 1,18.111.70 paisa and then life time tax has to be worked out as per notification dated 21st September, 1993 giving benefit of tax which ought to have been paid but for exemption. 17. The submission raised by Shri R.S. Jha, learned Dy. of India in the year 1991 when it purchased the vehicle from dealer at Rs. 1,18.111.70 paisa and then life time tax has to be worked out as per notification dated 21st September, 1993 giving benefit of tax which ought to have been paid but for exemption. 17. The submission raised by Shri R.S. Jha, learned Dy. Advocate General for the respondents that the instructions are proper and cannot be termed arbitrary is not acceptable as realization of tax on present market value of such new vehicle cannot be termed anything else than imaginary; is impermissible and violative of Article 14 and also the provisions of Adhiniyam and the notification dated 21st September, 1993 issued by Government of M.P. which are binding on Transport Commissioner. 18. Resultantly, the writ petition is allowed. Circular P/9 issued by Transport Commissioner is quashed. 19. In the facts and circumstances of the case, no order as to costs. Final Result : Allowed