Gopu Transport vs The Regional Transport Officer

A.K. Lakshmanan, J.—By consent of both parties, the main writ petition itself is taken up for hearing. I have heard Mr. N. Gopalakrishnan

for the Petitioner and Mr. V.P. Sengottuvel, Govt. Advocate for the Respondent.

The facts leading to the filing of the above writ petition are in short as under: The Petitioner is a registered owner of goods vehicle No. TSD

2547, which was covered by a National Permit issued by the Respondent. The Vehicle authorised to operate in the primary State of Tamil Nadu

and also in the reciprocating States of Kerala, Karnataka, Andhra Pradesh, Maharashtra, Gujarat and Pondicherry. The permit of the vehicle was

valid upto 27-4-1992. The Petitioner had paid the authorisation fee in respect of the vehicle for the period upto 31-3-1991. The fitness certificate

of the vehicle was valid upto 10-5-1990. The Petitioner had paid the tax for the home State of Tamil Nadu for the period upto 30-6-1990.

In the course of the business, when the vehicle was being operated in Maharashtra State, the vehicle broke down suddenly due to certain defect

near Thane on 27-4-1990. In those circumstances, the vehicle had to be towed to the nearest workshop at M/s. Bombay Transport Cooperative

consumer Society Limited, Vashi, Thane, Maharashtra State, and the Petitioner attempted to repair the vehicle. However, the spare parts required

were not available and in those circumstances, the vehicle could not be repaired and it is still kept at the Bombay Transport Co-operative

Consumer Society Limited. The vehicle has not been operated on any public road in India on and from 27-4-1990. In the meantime, the permit of

the vehicle, which was valid upto 27-4-1992, has also expired and the Petitioner had not filed any application for the continuance and the

authorisation to the reciprocating States beyond 31-3-1991.

In the month of February, 1993, the Petitioner decided to sell the vehicle to a third party as he found that it could not be operated on any

Highway. Therefore, on 10-2-1993, the Petitioner filed an application before the Respondent for the issue of a Tax Clearance Certificate to enable

him to sell the vehicle. In the letter, the Petitioner informed the Respondent that the vehicle could not be operated on and from 27-4-1990 due to

major repairs and that the vehicle was garaged at the Bombay Transport Co-operative Consumer Society Limited, Vashi, Thane, Maharashtra

State. The Respondent had referred the matter to the Regional Transport Officer, Thane, who has informed the Respondent that the vehicle was

stationed and garaged at Bombay Transport Co-operative Consumer society Limited, Thane. The Respondent, on receipt of the letter from the

Regional Transport Officer, Thane, has issued proceedings R. No. 52097/El/93 dated 7-9-1993 demanding the payment of a total sum of Rs.

49,680/- as tax due to the State of Tamil Nadu with penalty for the period commencing from 1-7-1991, and also a sum of Rs. 45,300/- as

authorisation fee to the composite States for the period ending with 31-3-1992 with penalty at 200%. Aggrieved against the demand raised by the

Respondent, the Petitioner has filed the above writ petition in this Court.

Mr. N. Gopalakrishnan, Learned Counsel for the Petitioner, at the time of hearing has raised the following legal contentions:

a) The Respondent had failed to issue a show cause notice for demanding tax as well as composite fee in this case and he has not provided any

opportunity to the Petitioner for making his representations, and that the procedure followed by the Respondent is contrary to the principles of

natural justice and on that ground itself the order of the Respondent is liable to be quashed.

b) The assessment of tax is the quasi judicial function of the Respondent and the Respondent cannot arbitrarily presume the rules of the roads by

the vehicle and demand tax abruptly.

c) this Court by a catina of decisions has held that in case of the demand of lax, apart from the issue of a show cause notice, a personal hearing

also must be given to the owner of the vehicle. In this case, no such opportunity has been given to the Petitioner and therefore, the whole

procedure adopted by the Respondent is against the law.

d) The Respondent had demanded the tax on the ground that the Petitioner had not filed a report as contemplated under Rule 172(6) read with

Rule 254 of the Tamil Nadu Motor Vehicles Rules, 1989 and in those circumstances, due to violation, the Petitioner was liable for tax and penalty.

e) The Fitness Certificate of the vehicle expired on 10-5-1990 and once the Fitness Certificate has expired, the registration of the vehicle as well

as the permit of the vehicle become ineffective and the vehicle cannot be operated on any public road.

f) The authorisation is quite different from the National Permit. Under the relevant Rules, if no application has been made for the renewal of the

authorisation, the National Permit itself will become invalid and the vehicle cannot be operated on any public road with load. It is stated that in the

instant case, no such application for the grant of authorisation for the period beyond 31-3-1991 was made by the Petitioner and in the

circumstances, the vehicle itself was not authorised to operate on any public road including the roads in the State of Tamil Nadu. This position of

law and fact has not been properly considered by the Respondent before demanding the tax with penalty in this case.

g) The motor vehicle tax is a compensatory one for the utilisation of the public road and when the vehicle itself had not been operated on any

public road, the question of levy of tax does not arise at all.

h) The Regional Transport Officer, Thane, himself has sent a report in this case of the physical presence of the vehicle in Maharashtra State and in

the circumstances, the Respondent cannot demand any tax for the vehicle for the State of Tamil Nadu as well as for other States.

The Respondent filed a counter affidavit through its Regional Transport Officer, Madras West. The following are the legal contentions raised by

the learned Govt. Advocate for the Respondent at the time of hearing:

a) The impugned demand of tax and penalty made by the Respondent was not based on fresh levy or assessment of tax, which may require

providing for an opportunity to the Petitioner to make his representation against the same. Since the impugned demand notice was issued for the

arrears of tax and penalty remaining unpaid, there was no need to issue a show cause notice.

b) The Petitioner, though claims that he had stopped the vehicle from plying on road since 27-4-1990, he has not reported this fact to the Office of

the Respondent until 19-2-1993.

c) As per Section 3(1) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, tax becomes payable in respect of the vehicles used or kept for

use. In the instant case, the vehicle deemed to have been kept for use until the validity of permit unless the stoppage is actually reported and the

records surrendered to the appropriate authority.

d) As per Rule 172(6) read with Rule 254 of the Tamil Nadu Motor Vehicles Rules, 1989, the owner of the vehicle shall report the stoppage of

the vehicle within three days of stoppage in Form S.P.R. Part A, together with a fee of Rs. 25/- paid towards grant of permission for stoppage of

the vehicle and such permission shall be obtained for every 20 days. The stoppage of the vehicle becomes valid and acceptable only when the

procedure aforesaid is adopted. If the owner of the vehicle fails to do so, then, his claim for stoppage of the vehicle made at a later date cannot be

accepted as bona fide and that the vehicle is deemed to have been kept for use and it becomes taxable.

e) As per Section 3(1) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, motor vehicle tax is leviable in respect of a vehicle used or kept for

use and that the Petitioner is liable to pay tax as long as the vehicle is kept for use when it is not the case of the Petitioner that all the formalities

under the Motor Vehicles Act and the Tamil Nadu Motor Vehicles Taxation Act have been complied with.

I have given my anxious consideration to the rival contentions made on either side. Act cording to Mr. N. Gopalakrishnan, Learned Counsel for

the Petitioner, the Petitioner is not liable to pay the amount demanded under the impugned proceedings. It is to be noticed that the Fitness

Certificate of the Vehicle was valid upto 10-5-1990 and the authorisation fee in respect of the vehicle was paid upto 31-3-1991 and the permit of

the vehicle itself was valid only upto 27-4-1992. It is the case of the Petitioner that the vehicle broke down due to certain defects near Thane in

Maharashtra State, that the vehicle had to be toed to the nearest work shop at Bombay Transport Co-operative Consumer Society Limited,

Vashi, Thane, Maharashtra State, that the attempt on the part of the Petitioner to repair the vehicle was also not feasible and that the vehicle had

not been operated at all on any public road in India on and from 27-4-1990. It is also specifically stated in the affidavit that the Petitioner had not

filed any application for the continuance and the authorisation to the reciprocating States beyond 31-3-1991 and hence no tax liability can be

fastened on the Petitioner.

It is seen from the files produced by the Respondent thought the learned Government Advocate at the time of hearing, that on receipt of letter

from the Petitioner, the matter was referred by the Respondent to the Regional Transport Officer, Thane, Maharashtra State, requesting him to

verify through their field staff and state whether the vehicle was stationed at the address given by the Petitioner. In response to the said letter, the

Inspector of Motor Vehicles, R.T.O., Thane, sent a reply dated 25-6-1993 enclosing the non-use verification certificate in respect of the vehicle

TSD 2547. It is seen from the said certificate bearing No. CR 344754 that the vehicle TSD 2547 was found at the address given by the Petitioner

in a stationary position. This certificate was dated 27-5-1993. Thus, it is clear from the files produced by the Respondent that the vehicle was

found in a stationary condition even as on 27-5-1993.

However, it is urged on behalf of the Respondent that the Petitioner has stopped the payment of tax without any intimation and hence the

demand notice was issued for the arrears of tax and penalty remaining unpaid and therefore, there is no question of issuing a show cause notice as

contended by the Petitioner. It is further stated that though the Petitioner claims that he had stopped the vehicle from plying on roads since 27- 4-

1990, he has not reported the fact to the Respondent until 19-2-1993 and that the Petitioner has not surrendered to the Respondent the permit

and other records of the vehicle immediately after stoppage. According to the learned Govt. Advocate, the tax becomes payable in respect of the

vehicle used or kept for use as per Section 3(1) of the Tamil Nadu Motor Vehicle Taxation Act, 1974 and in the instant case, the vehicle is

deemed to have been kept for use until the validity of the permit unless the stoppage is actually reported and the records surrendered to the

appropriate authorities.

According to the learned Government Advocate, as per Rule 172(6) read with Rule 254 of the Tamil Nadu Motor Vehicles Rules, 1989, the

owner of the vehicle shall report the stoppage of the vehicle within three days of stoppage in Form SPR Part A together with a fee of Rs. 25/-

towards grant of permission for stoppage of the vehicle and such permission shall be obtained for every 20 days, and that the stoppage of the

vehicle becomes valid and acceptable only when the procedure aforesaid is adopted and the Fitness Certificate and the permit also surrendered to

the concerned authorities. If the owner fails to do so, then the vehicle is deemed to have been kept for use. The learned Government Advocate

also invited my attention to the decision of this Court in W.P. Nos. 20476 and 19920 of 1992 reported in Raj Femandex v. Regional Transport

Officer, Madras South (1993 Writ L.R. 476) wherein M. Srinivasan, J., has held that even if the fitness certificate or permit is not valid, the vehicle

shall be deemed to have been kept for use under Rule 3 if it is covered by a permit. As such, the contention of the Petitioner that tax cannot be

levied if the vehicle is not covered by a valid fitness certificate is not correct. Commenting upon the certificate issued by the Regional Transport

Officer, Thane, Maharashtra State, the learned Govt. Advocate contended that the Regional Transport Officer at Thane has merely certified about

the presence of the vehicle in his jurisdiction and he has not committee anything about the usage or otherwise of the vehicle and as such, the tax

cannot be ''nil'' assessed on the basis of the report received from the Regional Transport Officer, Thane.

I am unable to countenance any of the contentions made on behalf of the Respondent. As referred to earlier, the Regional Transport Officer at

Thane has sent a non-use verification certificate in respect of the vehicle in question to the Respondent. The certificate annexed along with the letter

also specifically mentions that the vehicle found in the address given by the Petitioner is in a stationery position, which itself will go to show that the

vehicle in question was not put on the road as on 27-5-1993 and the same was not used by the Petitioner. It is also not the case of the Respondent

that the vehicle was found in any one of the public roads in India at any point of time after the stationing of the same in the workshop at Thane in

Maharashtra State. It is true that the Petitioner has sent the stoppage report to the authorities concerned only on 19-2-1993. But, in the judgment

relied on by the learned Govt. Advocate it has only been held that if the owner is not genuinely using the vehicle or not in a position to use the

vehicle or not keeping the vehicle in use, he will certainly be entitled to exemption from payment of tax for the period during which the vehicle was

not in use if he had furnished the necessary information to the authorities prescribed.

In the instant case, there cannot be any dispute in regard to the certificate issued by the Regional Transport Officer at Thane stating that the

vehicle was found in a stationary condition as on 27-5-1993. Hence, we can reasonably conclude on the basis of the certificate issued by the

transport authorities at Thane, that the Petitioner is not genuinely using the vehicle. The certificate also shows that the vehicle was found in a

stationary condition, which will only establish the case of the Petitioner that he was not in a position to use the vehicle or not keeping the vehicle in

use. I, therefore, hold that the Petitioner will certainly be entitled to exemption from payment of tax for the period during which the vehicle was not

in use, though the Petitioner has furnished information to the authorities concerned belatedly.

Section 2(8) of the Act defines ''Tax'' It means, the tax leviable under the Tamil Ndu Motor Vehicles Taxation Act, 1974. Section 3 of the Act

deals with levy of tax. According to that section, tax shall be levied on every motor vehicle used or kept for use in the State of Tamil Nadu. Thus, I

am of the view, that only if the vehicle is used or kept for use in the State of Tamil Nadu, the tax is leviable. In the instant case, admittedly, the

vehicle is stationed in Maharastra State and hence levy of Tamil Nadu tax and penalty do not arise at all.

According to Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, it shall be a condition of the permit of every transport vehicle will be so

maintained as to be available for the service for which the permit was granted for the entire period of currency of the permit and that the permit is

liable to be suspended or cancelled after due notice to permit holder if the vehicle has not been used for the purpose for which the permit was

granted for a continuous period of more than ten days during the period for which the permit authorise the use of the vehicle on the road, unless the

holder of the permit had obtained in writing the prior permission of the Transport Authority to suspend the service of the vehicle for a specific

period exceeding ten days. Thus, Rule 172(6) is only a condition of the permit and any violation of the permit condition would lead to cancellation

or suspension u/s 86 of the Motor Vehicles Act, 1988, Rule 172(6) cannot be invoked to collect tax under a different statute viz., Tamil Nadu

Motor Vehicle Taxation Act. I have also held in several cases that no tax could be levied if there is physical verification report is available. In this

case, there is a specific report from the Regional Transport Officer, Thane, Maharashtra State, to the effect that the vehicle in question is stationed

in Thane and in such circumstances, I am of the view, that no tax is due to the State of Tamil Nadu.

In this case, the Petitioner has not made any application for grant of authorisation as required under Rule 87 of the Central Motor Vehicle

Rules, 1989. Hence, I do not think, the Petitioner is liable to pay any tax or penalty due to the other States. I have taken this view in my judgment

dated 3-9-1992 in W.P. No. 17452 of 1991. As observed earlier, the decision reported in Raj Fernandez v. Regional Transport Officer, Madras

(1993 W.L.R. 476), relied on by the learned Govt. Advocate will be of no assistance to the Respondent and the said judgment is distinguishable

on facts. The said decision relates to a case where the vehicle is kept in Tamil Nadu. In the present case, admittedly, as per the certificate issued

by the Regional Transport Officer, Thane, Maharashtra State, the Vehicle is in a workshop at Thane in the State of Maharashtra. The vehicle has

not been used or kept for use in Tamil Nadu. Hence, in my opinion, Section 3 of the Tamil Nadu Motor Vehicles Taxation Act cannot be invoked

as proposed by the Respondent under the impugned proceedings.

As rightly contended by the Learned Counsel for the Petitioner, Rule 172(6) read with Rule 254 of the Tamil Nadu Motor Vehicles Rules,

1989, is not attracted in the instant case. Mr. N. Gopalakrishnan, Learned Counsel for the Petitioner is also right in his submission that the said

Rule would attract only disciplinary action against the permit but the same has no relevancy with regard to the assessment of tax. In this case, the

Fitness Certificate of the Vehicle expired on 10-5-1990 and once the Fitness Certificate has expired, the registration of the vehicle as well its

permit become ineffective and the vehicle cannot be operated on any public road. This Court has also held that tax cannot be levied if the vehicle is

not covered by a certificate of fitness. Under the relevant rules, if no application has been made for the renewal of the authorisation, the national

permit itself will become invalid and the vehicle cannot be operated on any public road with any load. In this case, it is not brought to the notice of

this Court that the Petitioner has made any application for the grant of authorisation for the period beyond 31-3-1991. Under such circumstances,

when the vehicle itself was not authorised to operate on any public road including the roads in the State of Tamil Nadu and when the vehicle was

not operated on any public road, the question of levy of tax does not arise at all.

For all the fore-going reasons, I allow the writ petition and quash the proceedings of the Respondent in R. No. 52097/El/93 dated 7-9-1993.

However, there will be no order as to costs. Consequent on the order passed by me quashing the impugned proceedings, the Petitioner will be

entitled for the issuance of Clearance Certificate and No Objection Certificate to the Regional Transport Officer, Thane in Maharashtra State. I,

therefore, direct the Respondent to issue the necessary certificates within four weeks from the date of receipt of the order either from this Court or

from the Petitioner which ever is earlier to the Petitioner so as to enable him to sell the vehicle TSD 2547 now stationed at Thane, Maharashtra

State.