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CHEQUE BOUNS CASE

Thus, the petitioner has produced documentary evidence to draw a reasonable inference that he is ordinarily resident of Bangalore. On what basis has the respondents came to the conclusion that the petitioner has used or kept his car for use in Puttaparthy making him liable for tax under Section 3(1) of the Taxation Act? In the counter affidavit, it is stated that the petitioner is residing in Puttaparthy with cell phone No.9491355021; the driver of the vehicle obtained licence in Andhra Pradesh being APDI No.2894/2008 valid upto 23.10.2019; when the copy of the proceedings dated 07.5.2010 was sent to premises No.12/2 Saibaba Market, Bangalore by speed post, the same was returned by the postal department with endorsement that, “the addressee left” and that when approached the Sub Divisional Engineer (Vigilance), BSNL, Anantapur informed that the cell phone connection was issued to the petitioner at his address in Puttaparthy. From the counter affidavit, as well as the documents annexed thereto, it is clear that the respondents came to the conclusion based on the letter of the Sub Divisional Engineer, BSNL, Anantapur. From the said letter, it is clear that the petitioner had obtained a cell phone connection at his address in Puttaparthy. Such a document by itself cannot be a conclusive evidence to show that the petitioner is a resident of Puttaparthy, and is using the car in the State of Andhra Pradesh. It is always possible that the petitioner, who is a businessman of Bangalore, may be visiting Puttaparthy regularly in connection with his business and that itself cannot lead to an inference that the car is used or kept for use in the State of Andhra Pradesh. It is nobody’s case that the respondents enquired with other business people in Bangalore as to the petitioner’s version of having his main business there. Admittedly the petitioner purchased the car in Bangalore, obtained registration from the transport authorities of Bangalore. Therefore, it would not be proper to come to such a conclusion without a proper enquiry. The Court can take judicial notice of the fact that Puttaparthy is a well known pilgrim centre and more often than not many devotees visit the place, and such visits are not always casual visits. Long stay at one place by itself cannot be the basis to conclude that the motor vehicle is used or kept for use. Failure on the part of the petitioner to seek new registration, or failure to intimate about his vehicle not being registered in Andhra Pradesh, in our considered opinion do not by themselves warrant an inference that the vehicle is used or kept for use in Andhra Pradesh. It is not a case where the petitioner claims any immunity on the ground that the vehicle is not fit to be used on the roads, in which event the presumption – as in Travancore Tea Estates – comes into play that registration of the vehicle is itself sufficient proof of the vehicle being used or kept for use in the State. In this background of the case, the impugned order cannot be sustained and further probe is required. In the result, for the above reason, we set aside the impugned demand notice in R.No.217505/2009, dated 19.7.2010 of the first respondent. We remand the matter to the said authority to conduct a detailed enquiry and pass necessary orders in accordance with law. On condition of the petitioner furnishing Bank guarantee for an amount equivalent to 70% of the life time tax payable under the Taxation Act, the vehicle (Tata Indica Car bearing Regn. No.KA 01 MC 8332) seized on 16.4.2010 vide VCR No.389132, shall be released to the petitioner if not already released. The first respondent shall complete the enquiry and pass appropriate orders within a period of three months from the date of receipt of a copy of this order. The writ petition is allowed accordingly without any order as to costs.?1

THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE

Puttaparthy / Puttaparthi Bus Stand Area : 6.N...

Puttaparthy / Puttaparthi Bus Stand Area : 6.Nov.2004 (Photo credit: in search for a new country of residence)

19-1-2011RAMESH RANGANATHAN
WRIT PETITION No.24438 of 2010

Raj Kumar Khatri, S/o.Motilal

The Deputy Commissioner of Transport, Anantapur And another

Counsel for Appellant: Mr. G.Sravan Kumar

Counsel for Respondents: The Additional Advocate General

:ORDER: (Per Hon’ble Sri Justice V.V.S.Rao)
The petitioner is owner of Tata Indica Car bearing Registration No.KA-01-MC
8332. He had purchased the car in the State of Karnataka with the financial
assistance provided by Reliance Capital, Bangalore. He paid life tax of
Rs.39,463/- vide challan No.CF/3092133, dated 25.8.2007 and obtained
registration of his vehicle from the Assistant Regional Transport Officer,
Bangalore (Central). In the Registration Certificate his address is shown as
M/s.Mahima Silk Sarees, 12/2/Saibaba Market, O.K. Road, Bangalore which is his
cloth business shop.
It appears that he also had a branch, of his cloth business, at Puttaparthy,
Andhra Pradesh. He, admittedly, regularly visits Puttaparthy for his business.
On 16.4.2010 when he was proceeding to Puttaparthy in his car from the workshop
at Anantapur, the second respondent checked the vehicle and also his cell phone
numbers. In the Vehicle Check Report (VCR), the second respondent alleged that,
on enquiry, it was found that the petitioner was residing near Chitravathi Road
of Puttaparthy in Anantpur with mobile No.9491355021. It was also alleged that
the vehicle was “kept for use” in Andhra Pradesh and, therefore, the petitioner
was liable to pay tax under Section 3 of the Andhra Pradesh Motor Vehicles
Taxation Act, 1963 (the Taxation Act). The first respondent, then issued show
cause notice dated 19.4.2010 asking the petitioner to explain within seven days
as to why life tax of Rs.32,300/- with penalty of Rs.20,680/- (total Rs.52,980/-
) should not be collected from him for plying the vehicle in Andhra Pradesh
without payment of the life tax due to the State. The petitioner submitted his
explanation on 07.5.2010. He alleged that he is a resident of Karnataka State;
he already paid life tax in the State of Karnataka; merely because he got
several SIM cards of various States, and he moves throughout India, he cannot be
treated as a resident of Andhra Pradesh. Along with the explanation he also
made an application for release of his car. On 07.5.2010, the first respondent
issued orders directing release of the vehicle on condition of the petitioner
depositing a sum of Rs.53,618/- by way of demand draft; to produce the vehicle
every Monday; and to file an undertaking that he will not alienate or encumber
the vehicle till disposal of the case. The petitioner did not comply with the
conditions nor did get the vehicle released. Be that as it is, the first
respondent issued final demand notice dated 19.7.2010 confirming the demand of
life tax and penalty. The first respondent also recorded a finding that the
petitioner was residing in Andhra Pradesh, and though the vehicle was registered
in State of Karnataka, he was regularly using the same in the State of Andhra
Pradesh. Assailing the demand notice, the petitioner filed the instant writ
petition seeking a writ of Mandamus to declare the impugned notice as illegal
and arbitrary, and for consequential directions. The petitioner contends that he
is a resident of Bangalore and, therefore, life tax on his car cannot be levied
and collected under Section 3 of the Taxation Act merely because he is using a
local mobile number of Puttaparthy. According to him when once he pays life tax
to the State of Karnataka, he is exempted from paying tax in the State of Andhra
Pradesh. For this purpose he drawn support from the Government notification vide
G.O.Ms.No.601, Home (TR-II), dated 27.3.1963.
On our request, the learned Additional Advocate General, Mr.Harinath Gupta,
appeared and made submissions. Before dealing with the submissions, it is
necessary to notice the defence from the counter affidavit filed by the first
respondent. He states that the petitioner intentionally avoided registration of
the vehicle in the State of Andhra Pradesh and avoided payment of life tax under
Section 3 of the Taxation Act read with Section 40 of the Motor Vehicles Act,
1988 (the MV Act). Therefore the vehicle was seized on 16.4.2010 under Section 8
of the Taxation Act vide VCR No.389132. It was kept in the premises of the
Deputy Transport Commissioner, Anantapur. The show cause notice was issued
demanding life tax at 9% of the vehicle cost under Section 3 of the Taxation
Act, and penalty upto April 2010 under Section 6 read with G.O.Ms.No.318, dated
03.11.2008 at 2% of the life tax. Later, considering the application of the
petitioner for release of the vehicle, the application was ordered subject to
conditions. The petitioner personally collected a copy of the proceedings dated
07.5.2010 ordering release, but did not comply with the conditions. It is
further stated that the petitioner is a resident of Andhra Pradesh. He is
residing at Vision Stores, Room No.9, Krishna Building, Chitravathi Road,
Puttaparthy. Though the car is registered in Bangalore, the petitioner is using
the vehicle in the State of Andhra Pradesh continuously and, therefore, he is
liable to pay tax under Section 3 of the A.P. Act.
The Counsel for the petitioner made the following submissions. The
petitioner is a resident of Bangalore having business there. He visits
Puttaparthy in connection with his business at the Branch office. The
petitioner produced sufficient evidence to show this, but the same was not
considered by the first respondent. Under the provisions of the Taxation Act,
and the Andhra Pradesh Motor Vehicles Taxation Rules, 1963 (the Taxation Rules),
advance life tax has to be paid at the time of the registration. As
registration of the vehicle and payment of advance life tax are complied with in
Karnataka, it would enanble the petitioner to use the vehicle any where in
India. When any vehicle is moved from the State of registration to another
State, the law requires a change of registration within a period of 12 months.
In the absence of any allegation that the petitioner’s vehicle was not
registered in the State of Andhra Pradesh within the stipulated period, the
demand of life tax again on the petitioner’s vehicle is illegal and
unconstitutional. The petitioner has not used or kept his vehicle for use in
Puttaparthy and, therefore, merely because a mobile phone connection was
obtained at Puttaparthy, the same cannot be construed as the vehicle having been
used in Andhra Pradesh. The Government issued orders in G.O.Ms.No.601, dated
27.3.1963, in exercise of its powers under Section 9(1), exempting non-transport
vehicles of other States from payment of tax and, therefore, the demand made by
the first respondent is illegal. Alternatively he submits that the levy of
penalty from the date of purchase for a period of 12 months is excessive and
illegal.
The Additional Advocate General for the State argues that the petitioner is
found to be a resident of Andhra Pradesh, and he is using a local mobile phone
connection. He avoided registration of the vehicle and payment of tax in Andhra
Pradesh and, therefore, he is liable to pay tax under Section 3 of the Taxation
Act. Under Section 47(4) of the MV Act, and Rule 96 of the Andhra Pradesh Motor
Vehicles Rules, 1989 (the APMV Rules), the owner of a vehicle, not registered in
Andhra Pradesh, is required to send information to the Registering Authority of
the area in which the motor vehicle is kept. Under Section 47(1) of the MV Act,
such vehicle has to be assigned a new registration mark on its removal to
another State. The petitioner has contravened these provisions. He nextly
contends that when the vehicle is used or kept for use in the State of Andhra
Pradesh, the petitioner is bound to pay life tax here, and claim refund of the
life tax under the Karnataka Motor Vehicles Taxation Act, 1957. As the
petitioner has used the vehicle in Puttaparthy, the taxable event occurred there
and, therefore, the impugned order is unassailable.
The only issue that arises for consideration, having regard to the background of
the case and submissions made across the Bar, is whether the petitioner is
liable to pay life tax for the vehicle in question under the Taxation Act, even
though the same was registered with the jurisdictional authority in the State of
Karnataka.
Section 3(1) of the Taxation Act is the charging section. According to the said
provision, tax shall be levied on every motor vehicle “used or kept for use, in
a public place in the State”. Section 3(2) thereof, with its four provisos,
amplifies the charging section stipulating either life tax, quarterly tax or tax
for a limited period. Section 4(1)(b) and (bb) of the Taxation Act empowers the
Government to grant refund of the tax at such rates as may be notified, “in the
case of removal of the vehicle to any other State on transfer of ownership or
change of address.”
Deviating from the Taxation Act, we may now advert to the relevant provisions of
the MV Act. Chapter IV (Sections 39 to 65) deal with registration of motor
vehicles. Section 39 requires registration of a motor vehicle without which a
person cannot drive a vehicle “in any public place or in any other place.” The
vehicle must carry a registration mark displayed in prescribed manner. The only
statutory exception is in respect of motor vehicles in possession of a ‘dealer’
which, as defined in Section 2(8) of the MV Act, includes a person who is
engaged in building bodies for attachment to chassis; or in the repair of motor
vehicles; or in the business of hypothecation, leasing or hire-purchase of motor
vehicle. Sections 42 to 46 of the MV Act deal with the method, manner and
effectiveness of such registration in India. Here, it is necessary to refer to
Sections 46 and 47 of the MV Act, to the extent relevant.
46. Effectiveness in India of registration.-Subject to the provisions of Section
47, a motor vehicle registered in accordance with this Chapter in any State
shall not require to be registered elsewhere in India and a certificate of
registration issued or in force under this Act in respect of such vehicle shall
be effective throughout India.
47. Assignment of new registration mark on removal to another State.-(1) When a
motor vehicle registered in one State has been kept in another State, for a
period exceeding twelve months, the owner of the vehicle shall, within such
period and in such form containing such particulars as may be prescribed by the
Central Government, apply to the registering authority, within whose
jurisdiction the vehicle then is, for the assignment of a new registration mark
and shall present the certificate of registration to that registering authority:
Provided that an application under this sub-section shall be accompanied-
(i) by the no objection certificate obtained under Section 48, or
(ii) in a case where no such certificate has been obtained, by-
(a) the receipt obtained under sub-section (2) of Section 48; or
b) the postal acknowledgement received by the owner of the vehicle if
he has sent an application in this behalf by registered post acknowledgement due
to the registering authority referred to in Section 48,

together with a declaration that he has not received any communication from such
authority refusing to grant such certificate or requiring him to comply with any
direction subject to which such certificate may be granted:

Provided further that, in a case where a motor vehicle is held under a hire-
purchase, lease or hypothecation agreement, an application under this sub-
section shall be accompanied by a no-objection certificate from the person with
whom such agreement has been entered into, and the provisions of Section 51, so
far as may be, regarding obtaining of such certificate from the person with whom
such agreement has been entered into, shall apply.

(2) to (4) ……………….. (omitted as not relevant)
(5) If the owner fails to make an application under sub-section (1) within the
period prescribed, the registering authority may, having regard to the
circumstances of the case, require the owner to pay, in lieu of any action that
may be taken against him under Section 177, such amount not exceeding one
hundred rupees as may be prescribed under sub-section (7):
Provided that action under Section 177 shall be taken against the owner where
the owner fails to pay the said amount.
(6) Where the owner has paid the amount under sub-section (5), no action shall
be taken against him under Section 177.
(7) For the purposes of sub-section (5), the State Government may prescribe
different amounts having regard to the period of delay on the part of the owner
in making an application under sub-section (1).

Section 47(4) of the MV Act empowers the State Government to make Rules
requiring the owner of a motor vehicle not registered within the State, but
brought into or is for the time being in the State, to furnish to the prescribed
authority such information with respect to the motor vehicle and its
registration as may be prescribed. Rule 96 finds place in the APMV Rules, which
reads as under.
96. Intimation in respect of vehicles not registered within the State :- Further
to the provisions of sub-section (4) of Sec.47, when any motor vehicle which is
not registered in this State has been kept within the State for a period
exceeding thirty days, the owner or other person in charge of the vehicle shall
send intimation to the registering authority of the area in which the motor
vehicle is at the time of making the report and shall intimate:-

1) his name and permanent address, and his address for the time being;

2) the registration mark of vehicle;

3) the make and description of the vehicle; and

4) in the case of a transport vehicle, the name of the authority within the
State by whom the permit has been issued or countersigned.

The detailed procedure for registration of motor vehicles is contained in
Rules 33 to 61 of the Central Motor Vehicles Rules, 1989 (MV Rules) and Rules 79
to 129 of the APMV Rules. For this case, these are not relevant.
The conspectus of various provisions, with regard to registration of motor
vehicles, is as follows. An owner of a motor vehicle shall not ply the same in
any public place, or in any other place, unless the vehicle is registered with
the Registering Authority in whose jurisdiction such owner has residence or his
place of business where the vehicle is normally kept. In cases where the motor
vehicle is registered in a State other than in Andhra Pradesh, and is kept or
used in Andhra Pradesh for a period exceeding 30 days (as per Rule 96 of the
APMV Rules), he shall send an intimation to the Registering Authority. If such
owner desires to obtain new registration in Andhra Pradesh, where the vehicle is
used or kept for use exceeding 30 days, a new registration has to be obtained in
Andhra Pradesh within a period of 12 months, failure of which would attract
compounding fee of Rs.100/- under Section 177(7) of the MV Act in lieu of
penalties under Section 177 of the MV Act.
The provisions in relation to registration or new registration in Andhra
Pradesh of a motor vehicle have nothing to do with the interpretation and
construction of Section 3(1) of the Taxation Act. The charging section has to
be construed strictly. If a vehicle is used or kept for use in a public place
in Andhra Pradesh, notwithstanding the provisions relating to registration or
new registration, the owner of the vehicle is liable to pay the tax as specified
in Section 3(2) of the Taxation Act read with the relevant schedule. Any
argument that non-intimation of keeping the motor vehicle in Andhra Pradesh for
a period exceeding 12 months under Section 47(1) of the MV Act or non-intimation
of the particulars of the vehicle kept within the State for a period exceeding
30 days under Rule 96 of the APMV Rules at best attract penalty and not the
motor vehicle tax is unsound. Under the provisions of the Taxation Act, tax can
be levied on every motor vehicle “used or kept for use” irrespective of whether
a vehicle, registered in another State, has obtained new registration in the
State of Andhra Pradesh as contemplated under the provisions referred to herein
above. This legal position is well settled.
In Automobile Transport Ltd v State of Rajasthan1, it was categorically
held by a seven Judge Constitution Bench of the Supreme Court that “the tax on
motor vehicles levied by the States under the law referable to Entry 57 of List
II of Schedule VII of the Constitution of India, is a compensatory tax levied
for the use of the roads and it is not a tax on ownership or possession of motor
vehicles”. The object of the Motor Vehicles Taxation Act is achieved by
charging to tax all motor vehicles suitable for use on roads which are used or
kept for use in the State. The registered owner or person having possession or
control of the motor vehicle is liable to pay the tax in advance to the State
where the motor vehicle is used or kept for use. Non-registration of the motor
vehicle, liable to tax is not always a deciding factor while deciding the
liability to pay the tax. The non-registration of the vehicle in the State even
if it is registered in another State would certainly attract penal provisions
and, indeed, prohibits the owner from using the vehicle in any public place or
any other place in the State where the vehicle is kept for use.
In State of Mysore v Sundaram Motors Private Limited2, a question arose whether
new cars and chassis of the respondent, passing through the State of Mysore,
were exigible to tax under Section 3 of the Mysore Motor Vehicles Taxation Act,
1957. In that case the transport authorities had demanded tax on the vehicles
passing through the territory of Mysore although they were not used there. The
dealer of the motor vehicles was successful in their challenge to such action
before a Division Bench of the High Court. In the State’s appeal before the Apex
Court, the plea was that the vehicles were exigible to tax as they were suitable
for use on roads and substantially used on the roads in the State by traversing
a distance of 400 miles. The plea was rejected and the appeal was dismissed
observing as below.
The word “kept” has not been defined in the Taxation Act. We have, therefore, to
interpret it in its ordinary popular sense, consistently with the context. The
word “kept” has been repeatedly used in the section. In sub-section (1), it
occurs in association with the phrase “for use on roads”. In that context, the
ordinary dictionary meaning of the word ‘keep in’ is to retain’, ‘to maintain’
or ’cause to stay or remain in a place’,’ to detain’, to stay or continue in a
specified condition, position, etc.’. In association with the use of the
vehicle, therefore, the word “kept” has an element of stationariness. It is
something different from a mere state of transit or a course of journey through
the State. It is something more than a mere stoppage or halt for rest, food or
refreshment, etc., in the course of transit through the territory of the State.

Even if the vehicle is suitable for use on the roads or a public place, it
would not be exigible to tax if a non-resident remained in the State for a day
or two during the course of transit or stops the vehicle for rest, food or
refreshment in the course of such transit. In our considered opinion, even if a
businessman visits the State for the purpose of his business for few days,
without any intention of staying in Andhra Pradesh, it would not fall within the
ambit of Section 3(1) nor does it come within the phrase ‘used or kept for use,
in a public place in the State’.
In Travancore Tea Estates Co. Ltd., v State of Kerala3 the appellant
company, which owned 17 motor vehicles like tractors, trailors and lorries used
for agricultural purposes in Tea estates, questioned the liability to pay tax on
these vehicles on the ground that they were not used or kept for use on the
roads in Kerala State. The learned Single Judge as well as the Division Bench
denied the relief. Before the Supreme Court the question was whether on the
assumption that the motor vehicles are used or kept for use within the estate,
and not intended to be used on public roads of the State, tax is leviable. A
three Judge Bench answered the issue in the negative agreeing with the
submission of the appellant that, “the tax is only excigible on vehicles used or
kept for use on public roads … (and) if the requirement contemplated under
the Act is not satisfied the registered owner or person in possession or control
of the vehicle would not be entitled to claim any exemption from payment of
tax”. In case of dispute whether the motor vehicles are “used or kept for use”
in the State how does the “relevant fact in issue” need to be proved? The
Supreme Court indicated the burden and requirement of proof in the following
passage (para 6).
If the words “used or kept for use in the State” are construed as used or
kept for use on the public roads of the State, the Act would be in conformity
with the powers conferred on the State legislature under Entry 57 of List II. If
the vehicles are suitable for use on public roads they are liable to be taxed.
In order to levy a tax on vehicles used or kept for use on public roads of the
State and at the same time to avoid evasion of tax the legislature has
prescribed the procedure. Sub-section (2) of Section 3 provides that the
registered owner or any person having possession of or control of a motor
vehicle of which a certificate of registration is current shall for the purpose
of this Act be deemed to use or keep such vehicles for use in the State except
during any period for which the Regional Transport Authority has certified in
the prescribed manner that the motor vehicle has not been used or kept for use.
Under this sub-section there is a presumption that a motor vehicle for which the
certificate of registration is current shall be deemed to be used or kept for
use in the State. This provision safeguards the revenue of the State by
relieving it from the burden of proving that the vehicle was used or kept for
use on the public roads of the State. At the same time the interest of the bona
fide owner is safeguarded by enabling him to claim and obtain a certificate of
non-user from the prescribed authority. In order to enable the owner of the
vehicle or the person who is in possession or in control of the motor vehicle of
which the certificate of registration is current to claim exemption from tax he
should get a certificate in the prescribed manner from the Regional Transport
Officer.
(emphasis supplied)

International Tourist Corp. v State of Haryana4 is a case concerning the
vires of Section 3(3) of Punjab Passengers and Goods Taxation Act, 1952. The
said provision subjected the passengers and goods carried by a motor vehicle on
a joint route to tax. The owners of the vehicles operated contract carriages
between Delhi and Jammu. In the course of the journey, the vehicles traveled
through the State of Haryana on NH-1, and the State levied tax on passengers and
goods under the impugned Section 3(3) referred to hereinabove. The Supreme Court
dismissed the writ petitions observing as under.
In the Motor Vehicles Taxation Acts of several States the charging section
generally runs as follows: “There shall be levied and collected on all motor
vehicles used or kept for use in the State a lax at the rate fixed by the State
Governments….” In these cases the taxable event is “keeping for use” and
alternately user within the State. Once the motor vehicle is used within the
State the taxable event occurs and the tax is attracted. The decision in State
of Mysore v. T.V. Sundaram Iyengar & Sons (P) Ltd., AIR 1980 SC 148 : ((1980) 1
SCC 66, has no application to such cases as already pointed out by us while
dealing with a similar submission of Shri Mridul in the Uttar Pradesh cases.
… … In some States, the Motor Vehicles Taxation Acts provide for payment of
tax in the event only of vehicles being “kept for use in the State” and provide
for no other alternative taxable event. In such cases the principle of our
decision in State of Mysore v T.V. Sundaram Iyengar & Sons (P) Ltd., may be
attracted. It will depend on an interpretation of the provisions of the relevant
statutes.

In State of Karnataka v K.Gopalakrishna Shenoy5 a question arose whether
the owner or person having possession or control of a motor vehicle, which was
in a state of repair and was not put to use on the road, was not bound to pay
tax especially when the vehicle was not having a certificate of fitness. The
Supreme Court ruled that the charging section in the Taxation Act has to be
construed on its own force and not with reference to Section 38 of the MV Act,
1939, (now Section 56 of the MV Act, 1988), which makes it mandatory for every
transport vehicle to carry a certificate of fitness issued by the prescribed
authority. In other words, an owner of the motor vehicle cannot escape
liability to tax even if the vehicle is under repair without a certificate of
fitness unless the owner claims refund of tax under the relevant provision on
the ground that the vehicle has not been used for any period, not being less
than a month. It was further held that, when once the certificate of
registration under the MV Act is current, it shall be deemed that the vehicle is
suitable for use on the road. Referring to Automobile Transport Ltd, it was
observed as follows.
It, therefore, follows that the same meaning should be given to those
words occurring in Section 3(1) and the Explanation also. The resultant position
that emerges is that Section 3(1) confers a right upon the State to levy a tax
on all motor vehicles which are suitably designed for use on roads at prescribed
rates without reference to the roadworthy condition of the vehicle or otherwise.
Section 4 enjoins every registered owner or person having possession or control
of the motor vehicle to pay the tax in advance. The Explanation to Section 3(1)
contains a deeming provision and its effect is that as long as the Certificate
of Registration of a motor vehicle is current, it must be deemed to be a vehicle
suitable for use on the roads. The inevitable consequence of the Explanation
would be that the owner or a person having control or possession of a motor
vehicle is statutorily obliged to pay the tax in advance for the motor vehicle
as long as the Certificate of Registration is current irrespective of the
condition of the vehicle for use on the roads and irrespective of whether the
vehicle had a certificate of fitness with concurrent validity or not.

In State of Kerala v Aravind Ramakant Modawdakar6, statutory enhancement
of the rate of quarterly tax in respect of contract carriage vehicles operating
inter-State was successfully assailed in the High Court on the ground of invalid
classification of contract carriages as inter-State and intra-State vehicles.
The Supreme Court allowed the appeals of the State of Kerala holding that the
statute is not open to attack on the ground that it taxes some persons and not
others. Explaining the charging provision, the Court observed as follows.
It is also an admitted fact that under sub-section (1) of Section 3 of the Act,
the State has power to levy tax on every motor vehicle used or kept for use in
the State at the rates specified for such motor vehicles in the Schedule to the
Act. … … It is also a settled position in law that the actual user of the
road by the vehicles which are covered by the requisite permits is not always a
relevant factor since the taxable event under Section 3(1) of the Act occurs
when the vehicle is used or is kept for use in the State. Therefore, once the
vehicle becomes liable for payment of tax the extent and quantity of use by the
vehicle is not a decisive factor for the purpose of levy of tax as could be seen
from the judgment of this Court in the case of International Tourist Corpn. v
State of Haryana, (1981) 2 SCC 318 : AIR 1981 SC 774.
(emphasis supplied)

The State of Gujarat amended the Bombay Motor Vehicles Tax Act (which was
made applicable to Gujarat) by Act No.2 of 2001 amending/inserting Section 3-A,
which enabled levy and collection of tax on contract carriages used or kept for
use in the State. The challenge to the said provision before the High Court of
Gujarat was successful and Sections 3-A (1) and (2) were struck down. The High
Court also restrained the State authorities from recovering any tax from the
owners of contract carriages, which were kept, but were not being used. The
appeal by the State was allowed in a decision reported as State of Gujarat v
Akhil Gujarat Pravasi V.S. Mahamandal7. The Apex Court referred to the earlier
precedents and observed that, “if a vehicle is “used” or is “kept for use” in
the State, it becomes liable for payment of tax and the actual use or quantum of
use is not material” and that the provision for refund of tax does not mean that
the legislature can only make a provision for levy of tax which is limited for
the period of actual use or that no tax can be levied during the period the
vehicle is not put to use in the State.
There is sufficient authority as above to conclude that, a vehicle
registered in one State of the Union attracts tax if the said vehicle is used or
kept for use in another State. In such an event, the owner of the vehicle is
entitled to claim refund of proportionate tax as provided under the State law.
Be it noted that, in exercise of powers under clause (bb) of sub-section (1) of
Section 4 of the Taxation Act, the Government of Andhra Pradesh issued
notification vide G.O.Ms.No.411 (TR-II), dated 28.4.1987 notifying refund of tax
at the rates mentioned therein, inter alia, in respect of motor vehicles removed
to any other State on transfer of ownership or change of address. The learned
Additional Advocate General brought to our notice Section 7(3) and Schedule Part
C-4 of the Karnataka Motor Vehicles Taxation Act, 1957, which entitles a
registered owner to seek refund of tax at the rates specified therein in the
case of removal of the vehicle to any other State.
The question that still remains is whether the respondents in this case
have discharged the burden of proving that the petitioner had used, or had kept
his vehicle for use, in the State of Andhra Pradesh. The following facts are not
disputed. The petitioner is a resident of Bangalore engaged in cloth business in
the name and style of M/s.Mahima Silk Sarees. He purchased Tata Indica car in
2007 with financial assistance from Reliance Capital, Bangalore. The vehicle was
registered under the MV Act and Rule 48 of the MV Rules by the Assistant
Regional Transport Officer, Bangalore (Central) and he paid life tax of
Rs.39,463/-. The petitioner also produced evidence to show that he has a bank
account in Punjab and Sind Bank, Chikpet Branch, Bangalore. He is an Income tax
assessee on the rolls of Income Tax Officer, Ward-3 (3), Bangalore. He obtained
landline telephone connection No.22110561 from Bangalore Telecom District. He
is a resident of 1/2 2 (or) 13/2, Saibaba Market, O.K. Road, Bangalore. He also
obtained motor vehicle insurance from Cholamandalam General Insurance, Bangalore
branch. Thus, the petitioner has produced documentary evidence to draw a
reasonable inference that he is ordinarily resident of Bangalore.
On what basis has the respondents came to the conclusion that the
petitioner has used or kept his car for use in Puttaparthy making him liable for
tax under Section 3(1) of the Taxation Act? In the counter affidavit, it is
stated that the petitioner is residing in Puttaparthy with cell phone
No.9491355021; the driver of the vehicle obtained licence in Andhra Pradesh
being APDI No.2894/2008 valid upto 23.10.2019; when the copy of the proceedings
dated 07.5.2010 was sent to premises No.12/2 Saibaba Market, Bangalore by speed
post, the same was returned by the postal department with endorsement that, “the
addressee left” and that when approached the Sub Divisional Engineer
(Vigilance), BSNL, Anantapur informed that the cell phone connection was issued
to the petitioner at his address in Puttaparthy. From the counter affidavit, as
well as the documents annexed thereto, it is clear that the respondents came to
the conclusion based on the letter of the Sub Divisional Engineer, BSNL,
Anantapur. From the said letter, it is clear that the petitioner had obtained a
cell phone connection at his address in Puttaparthy. Such a document by itself
cannot be a conclusive evidence to show that the petitioner is a resident of
Puttaparthy, and is using the car in the State of Andhra Pradesh. It is always
possible that the petitioner, who is a businessman of Bangalore, may be visiting
Puttaparthy regularly in connection with his business and that itself cannot
lead to an inference that the car is used or kept for use in the State of Andhra
Pradesh. It is nobody’s case that the respondents enquired with other business
people in Bangalore as to the petitioner’s version of having his main business
there. Admittedly the petitioner purchased the car in Bangalore, obtained
registration from the transport authorities of Bangalore. Therefore, it would
not be proper to come to such a conclusion without a proper enquiry. The Court
can take judicial notice of the fact that Puttaparthy is a well known pilgrim
centre and more often than not many devotees visit the place, and such visits
are not always casual visits. Long stay at one place by itself cannot be the
basis to conclude that the motor vehicle is used or kept for use. Failure on
the part of the petitioner to seek new registration, or failure to intimate
about his vehicle not being registered in Andhra Pradesh, in our considered
opinion do not by themselves warrant an inference that the vehicle is used or
kept for use in Andhra Pradesh. It is not a case where the petitioner claims
any immunity on the ground that the vehicle is not fit to be used on the roads,
in which event the presumption – as in Travancore Tea Estates – comes into play
that registration of the vehicle is itself sufficient proof of the vehicle being
used or kept for use in the State. In this background of the case, the impugned
order cannot be sustained and further probe is required.
In the result, for the above reason, we set aside the impugned demand
notice in R.No.217505/2009, dated 19.7.2010 of the first respondent. We remand
the matter to the said authority to conduct a detailed enquiry and pass
necessary orders in accordance with law. On condition of the petitioner
furnishing Bank guarantee for an amount equivalent to 70% of the life time tax
payable under the Taxation Act, the vehicle (Tata Indica Car bearing Regn. No.KA
01 MC 8332) seized on 16.4.2010 vide VCR No.389132, shall be released to the
petitioner if not already released. The first respondent shall complete the
enquiry and pass appropriate orders within a period of three months from the
date of receipt of a copy of this order.
The writ petition is allowed accordingly without any order as to costs.?1
AIR 1962 SC 1406
2 (1980) 1 SCC 66 : AIR 1980 SC 148 (para 8)
3 AIR 1980 SC 1547 : (1980) 3 SCC 619
4 AIR 1981 SC 774 : (1981) 2 SCC 318
5 AIR 1987 SC 1911 : (1987) 3 SCC 655
6 AIR 1999 SC 2970 : (1999) 7 SCC 400
7 AIR 2004 SC 3894 : (2004) 5 SCC 155 

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