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2009 DIGILAW 1100 (KER)

C. Sebastian v. State of Kerala

2009-11-19

C.N.RAMACHANDRAN NAIR, V.K.MOHANAN

body2009
Judgment :- Ramachandran Nair, J. The appeal is filed against judgment of the learned single Judge holding that appellant is liable to pay arrears of motor vehicle tax in respect of a Tempo Traveller bearing registration No.KL-01/C-1497 for the period from 1.7.1996 to 2.2.1999. We have heard counsel appearing for the appellant, Standing Counsel appearing for the financier-4th respondent and the Government Pleader for the other respondents. 2. The vehicle was purchased by the appellant under hire-purchase arrangement with the additional-4th respondent herein. When appellant defaulted payment of hire charges, vehicle was admittedly re-possessed by the 4th respondent on 17.12.1997. As on the date of re-possession by the financier, the vehicle was already in arrears of tax for the period commencing from 1.7.1996 onwards. Admittedly the financier did not care to clear the arrears of tax or even file G From for the period the vehicle was retained by them. Even though vehicle was stated to be sold by the financier to another person, it is not known whether the vehicle was put on road or whether the RC was changed from the appellant to the financier and in turn from the financier to the purchaser. All what stands proved is that the vehicle stands dismantled on 2.2.1999 which means that vehicle subject to exemption if any granted based on Form G furnished, would have been liable for payment of tax up to 31st January, 1999. The learned single Judge held that since the appellant being registered owner has not filed Form G for exemption prescribed under Rule 5 of the Motor Vehicles Taxation Rules, is liable to pay the tax. 3. During hearing counsel for the appellant contended that appellant was disabled from filing Form G because he could not have furnished the particulars required to be given in Form G such as place of garage, probable date of reuse etc., because vehicle was under the control of the 4th respondent. Counsel for the 4th respondent contended that the vehicle was retained until sold by them only because appellant kept on offering payment which he never did. He further contended that 4th respondent has suffered loss on account of failure of the appellant to remit the hire charges and over and above if they are held to be liable for payment of arrears of tax, the same will cause heavy hardship to the 4th respondent. 4. He further contended that 4th respondent has suffered loss on account of failure of the appellant to remit the hire charges and over and above if they are held to be liable for payment of arrears of tax, the same will cause heavy hardship to the 4th respondent. 4. Procedure for levy, collection and recovery of motor vehicle tax are contained in the Kerala Motor Vehicles Taxation Act. Section 3 (2) makes it clear that liability for payment of tax is on the registered owner or the person in possession and control of the vehicle, who by the fiction introduced in the said Section is deemed to be keeping the vehicle for use in the State. Therefore, liability under Section 3(3) is joint and several and both the appellant and 4th respondent are liable for payment of tax that was due after 17.12.1997 when the vehicle was repossessed by the financier-4th respondent. In other words, appellant being the registered owner as well as the person in possession and control of the vehicle, was solely liable for payment of arrears of tax from 1.7.1996 to 17.12.1997. So much so, the judgment of the learned single Judge upholding liability of the appellant up to 17.12.1997 calls for no interference. Since liability is till end of the month of the quarter, arrears could be recovered from the appellant from 1.7.1996 to 31.12.1997. 5. Next question to be considered is the liability for tax after date of repossession by the 4th respondent. We have already referred to Section 3(3) which along with registered owner casts joint liability on the person who is in possession and control of the vehicle. In fact, it is worth while to refer to Section 9 of the Motor Vehicles Taxation Act which is as follows: “S.9. Liability to payment of tax by persons succeeding to the ownership, possession or control of motor vehicles:- (1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before payment of the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall be liable to pay the said tax. (2) Nothing contained in sub-section (1) shall be deemed to affect the liability to pay the said tax of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle.” 6. It is very clear that the purpose of Section 9 is to ensure recovery of tax even after sale or transfer of possession of a vehicle that was in arrears of tax. Without exonerating the registered owner who incurred the liability for tax during the period of use under sub-clause (2) of Section 9, sub-clause (1) of it makes the transferee or the person who takes over possession and control of the vehicle, also liable for payment of arrears of tax. Therefore, the departmental authorities are entitled to recover the arrears from the person who has purchased or got possession of the vehicle that was in arrears of tax. Therefore, arrears of tax from 1.7.1996 also could in fact be recovered from the 4th respondent by virtue of operation of Section 9(1) of the Act. We have already found liability for arrears of tax on the appellant from 1.7.1996 to 31.12.1997 and if the appellant fails to remit the same, recovery will be made without delay. We do not think the 4th respondent can escape from liability for payment of tax from 1.1.1998 till 31.1.1999 because during that period they were in possession and control of the vehicle and the same is and admitted fact. So much so, we direct respondents 1 to 3 to recover the arrears of tax from 4th respondent for the period commencing from 1.1.1998 to 31.1.1999. Counsel for the 4th respondent rightly contended that tax liability is also covered by agreement between the 4th respondent and the appellant and also with the subsequent purchaser and so much so, 4th respondent is free to enforce the provisions of the agreement between the parties in accordance with law and if tax paid by them under our judgment could be recovered from the appellant or the subsequent purchaser, 4th respondent is free to do so by resorting to legal remedies. Since the appellant’s business collapsed on account of financial losses and 4th respondent also has not been a beneficiary of the transaction, we feel they could be exonerated from surcharge or interest on tax, provided both the appellant and 4th respondent discharge liability by making voluntary payment of the arrears of tax excluding the surcharge or interest for the separate period stated above, within a period of six weeks from today. While demanding the balance from the appellant, amount remitted under interim orders of this court should be credited. However, if there is any excess payment, there is no need to grant refund because of the waiver of surcharge granted by us. Writ Appeal is disposed of as above. Order accordingly.