TMI Blog2022 (12) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... have, while upholding the circular dated 29th March, 2016, discussed either Rule 7 of the OMVT Rules 1976 or Form-XIV of the OMV Rules, 1993. The concept of a TC is that it can be used on several vehicles of the same make and model which are possessed by the dealer under the TC limited to the purposes specified in Rule 41 of the MV Rules. Since the purposes for which the vehicles are used is clearly specified in Rule 41 of the MV Rules, there can be no apprehension of misuse by the dealer of such vehicles for purposes other than Rule 41 of the MV Rules. It will have to be found as a fact that there has been such misuse for which there would have to be an enquiry of some sort preceded by a notice to the concerned dealer. This Court is unable to subscribe to the view of the learned Single Judge that the interpretation placed on Section 5 of the OMVT Act through the impugned instruction is correct and in consonance with the legislative intent behind Section 5 of the OMVT Act and the scope and ambit of that provision. In other words, this Court is of the considered view that the instruction dated 29th March, 2016 is ultra vires Section 5 of the OMVT Act and therefore cannot be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of 2017 W.A. No.233 of 2017 W.A. No.250 of 2017 W.A. No.251 of 2017 W.A. No.257 of 2017 W.A. No.282 of 2017 W.A. No.336 of 2017 W.A. No.382 of 2017 W.A. No.222 of 2017 W.A. No.232 of 2017 W.A. No.236 of 2017 W.A. No.237 of 2017 W.A. No.242 of 2017 W.A. No.243 of 2017 W.A. No.244 of 2017 W.A. No.245 of 2017 W.A. No.246 of 2017 W.A. No.253 of 2017 W.A. No.330 of 2017 W.A. No.142 of 2018 W.A. No.143 of 2018 W.A. No.381 of 2018 W.A. No.188 of 2017 W.A. No.24 of 2018 W.A. No.34 of 2019 W.A. No.197 of 2017 M/s. Sushree Automotives, M/s. Kanchan Murali Auto, Mahindra Mahindra Financial Services Ltd., Jyote Motors, Odisha Automobiles Dealers Association (OADA), M/s. Urbasi Bajaj, Ashirbad Automobile and another, M/s. Shree Durga Motors, M/s. S.K. Motors, Ananta Automobiles Private Ltd., M/s. Narayani Motors Pvt. Ltd., and another, M/s. Chandan Automobiles M/s. Paradeep Motors, M/s. Varsa Motors, M/s. Sanjibani Motors Pvt. Ltd., M/s. Maa Tarini Motors, M/s. Choudhary Automobiles, M/s. Sova Automobiles, M/s. Bharat Automobiles, Sundaram Finance Ltd., M/s. Bina Motors, M/s. Consortium Automobiles Pvt. Ltd., M/s. Ayush Automobiles, M/s. Shree Gayatri Motors, M/s. Shree Laxmi Enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and it is therefore a Central Act . It has been enacted with reference to Entry-35 of List-III of the Schedule-VII of the Constitution which reads as under: Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. 4. In terms of Section 39 of the MV Act, registration of a motor vehicle is compulsory. Section 39 of the MV Act reads as under: 39. Necessity for registration No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner: Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government. 5. As far as the proviso to Section 39 of the MV Act is concerned, reference is required to be made to Rule 33 of the Central Motor Vehicles Rules, 1989 (MV Rules) which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding to or returning from an exhibition of motor vehicles or any place at which the vehicle is to be or has been offered for sale; or (h) for removing the vehicle after it has been taken possession of by or on behalf of the financier due to any default on the part of the other party under the provisions of an agreement of hire-purchase, lease or hypothecation. 9. It is not in dispute that all of the Appellants herein have applied for or obtained TC. Rule 39 of the MV Rules states that a trade registration mark that has been assigned in respect of each TC granted or renewed under Rule 35 of the MV Rules shall not be used upon more than one vehicle at a time or upon any vehicle other than a vehicle bona fide in possession of the dealer or manufacturer of automobile or automobile ancillaries in the course of his business or any type of vehicle other than the one for which the TC is issued. Rule 39 (2) requires a TC to be carried on a motor vehicle in a weatherproof circular folder and the trade registration mark is required to be exhibited in a conspicuous place in the vehicle. The contention of the Appellants has been that the same TC can be used in multiple types a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles in respect of the vehicles in his possession in the course of his business as such manufacturer or dealer under the authorization of a TC granted under the MV Rules . Section 5 reads as under: 5. Tax payable by Manufacturers and Dealers Notwithstanding the provisions contained in Sections 3, 3-A, 4 or 4-A, a tax at the annual rate specified below shall be paid in advance by a manufacturer or dealer in motor vehicles in respect of the vehicles in his possession in the course of his business as such manufacturer or dealer under the authorization of trade certificate granted under the Motor Vehicles Rules: Description of motor vehicle Annual rate 1. Motor Cycles- (a) where the total number of vehicles does not exceed ten Rs.2000.00 (b) where such total number exceeds ten Rs.2000.00 Plus Rs.200.00 for each vehicle exceeding ten 2. Motor vehicles other than Motor Cycles weighing not more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Signature of Trade Certificates Holder Certificate This is to certify that the maximum number of vehicles covered under the trade certificates has never been exceeded at any point of time Signature of Trade Certificate Holder 17. The case of the Appellants is that the tax in terms of Section 5 of the OMVT Act has to be paid annually in advance for the maximum number of vehicles for which the TC has been issued to be kept in possession by them at any given point in time for the purposes specified in Rule 41 of the MV Rules. Therefore, this tax is in respect of the total number of such vehicles as specified in TC. 18. Rule 36 of the OMV Rules requires the manufacturer or dealer to furnish to the registering authority, information in Forms-XIII and XIV in respect of the vehicles received in stock and sold during every month by the 15th of the succeeding month. Form-XIV also contains a declaration that the dealer has not had in his possession vehicles exceeding the total number covered under the TC at any point in tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is not in conformity with the total no of registration of vehicles made by the dealers. You are therefore directed to collect the tax from the dealers/manufacturers on the basis of total no. of vehicles possessed registered during the entire year by the dealer. Further, you are instructed to be more vigilant at dealer points through regular checking conducting raids to collect the tax for the vehicles possessed by the dealers. Transport Commissioner, Odisha. 20. It is obvious from a reading of the above communication that the trigger point was the detection by the STA that the number of vehicles mentioned in the TC of the dealers is not in conformity with the total number of registration of vehicles made by the dealers. Therefore, directions were issued to the RTOs to collect tax from the dealers/manufacturers on the basis of the total number of vehicles possessed and registered during the entire year by the dealer. In other words, tax was to be collected under Section 5, OMVT Act was not confined to vehicles possessed under the authorization of the TC granted. Grounds of challenge before the Single Judge 21. The above communication was chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V Rules. (ii) Admittedly, the dealers who had been paying tax as per the TC issued against the maximum number of vehicles possessed at a given point of time and the same has also been paid in advance. (iii) Section 5 was unambiguous that the tax thereunder shall be paid in advance by the dealer in respect of vehicles in course of his business under the authorization of TC. Possession of a vehicle by the dealer in the course of his business and sale thereof and consequential registration are intrinsically connected to each other . (iv) The expression vehicle in possession in the course of his business has wide implication. Therefore, once the vehicle is in possession in course of the business of a dealer under the authorization of trade certificate, at the end of twelve months, if it is ascertained that the dealer was in possession of vehicles in excess of the number indicated in the trade certificate for which no advance tax has been collected, in that case, the dealer is liable to pay the tax in consonance with the circular issued by the opposite parties. Needless to say that under a trade certificate, the dealer is obliged to retain the number of vehicles men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant whether the additional incidents of Trade Certificate Tax (TC Tax) in terms of Section 5 of the OMVT Act and Trade Certificate Fees (TC fees) in terms of Rule 81 of the Central Motor Vehicle Rules, 1989 has been passed on to the customer and has in fact been paid by the customer. Both sets of affidavits be filed with advance copies served on the other side before the next date. 2. List on 5th December, 2022. 3. The interim order passed earlier shall continue till then. 27. Pursuant thereto, an affidavit dated 3rd December 2022 has been filed by the STA in W.A. No.223 of 2017 inter alia stating as under: 3. That pursuant to the impugned instruction dated 29.03.2016 issued by the Transport Commissioner, no extra tax at the annual rate has been collected from the vehicles under the possession of the manufactures or dealers of motor vehicles in course of business by the Taxing Officer-cum-RTOs in Odisha except the tax prescribed under Section 5 of the OMVT Act, 1975. 28. It is further pointed out that under Section 5 of the OMVT Act, the following amounts are charged per vehicle: Sl.No. Description of motor vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annually during the course of his business, then the qualifying expression under the authorization of trade certificate occurring in Section 5 would lose all significance. It would become irrelevant whether the dealer maintains the maximum number of vehicles authorized under the TC or not at any given point in time since anyway every vehicle sold by him had to suffer tax. Such an interpretation would render Section 5 of the OMVT Act totally redundant. (ii) Section 5 of the OMVT Act had to be strictly construed since it was a charging section in a taxation statute. The Commissioner could not have changed the taxable event from vehicles in possession under a TC to all vehicles possessed and registered during the entire year . This in any event could not be done by mere instruction by the Commissioner. (iii) The field of taxation for motor vehicles in respect of TC was already occupied by the MV Act, which was a Central Act and there was no further scope for any further taxation by the State in respect of TC. Further, the MV Rules being notified later than the OMVT Act could prevail. Therefore, Section 5 of the OMVT Act was ultra vires the Constitution and beyond the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating the number of vehicles for which the dealer had obtained TC and the number of vehicles the dealer possessed and sold. Accordingly in respect of the balance number of vehicles, the demand notice for payment of tax under Section 5 of the OMVT Act was issued. Inasmuch as the dealer had to also apply for a TC for such excess vehicles and pay an application fee i.e., the TC fee that was also sought to be collected under Rule 34 read with Rule 81 of the MV Rules. In any event the challenge to the imposition of the TC fees under Rule 81 of the MV Rules was never raised in the writ petitions before the learned Single Judge. Analysis and reasons 36. At the outset, it requires to be noticed that as far as the challenge to the constitutional validity of Section 5 of the OMVT Act is concerned, it is no longer res integra. The constitutional validity of an identical provision, viz., Section 6 of the BMVT Act was upheld by the Patna High Court in M/s. Tata Engineering and Locomotive Company Limited v. State of Bihar (supra) which was affirmed by the Supreme Court by the dismissal of Special Leave Petitions challenging the said decision. The said decision was reaffirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Single Judge in the impugned judgment which is under challenge in these appeals. 38. In the written submission filed on behalf of the STA, reliance is placed both on the decisions of the Patna High Court in M/s Tata Engineering and Locomotive Company Limited v. State of Bihar (supra) (rendered in 1999) and the judgment of the Supreme Court of India in Tata Motor Limited v. State of Jharkhand (supra) (rendered in 2020) to contend that there is an obligation under Section 5 of the OMVT Act on all the dealers to pay the tax as stipulated thereunder. These two decisions, however, did not address the question of interpretation of Section 6 of the BMVT Act, which is identically worded as Section 5 of the OMVT Act. In other words, in the said two decisions, the question was not whether for the purposes of payment of tax thereunder by the dealer, the number of vehicles possessed and registered during the entire year by the dealer, could form the basis, notwithstanding that the provision itself states that it is in respect of vehicles in his possession in the course of his business as dealer, under the authorization of trade certificate granted under the Motor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense explained above applies primarily to charging provisions in a taxing statute and has no application to a provision not creating a charge but laying down machinery for its calculation or procedure for its collection, and such machinery provisions have to be construed by the ordinary rule of construction. 43. Bearing the above principles on mind, if one approaches the charging section in the present taxing statute viz., the OMVT Act, then it is plain that Section 5 of the OMVT Act is one of the charging Sections as regards holders of TCs. It must be noticed that there are other charging Sections of the OMVT Act, namely, Sections 3,3-A, 4 and 4-A dealing with different kinds of taxes for each of which there is a taxable event . For e.g., in Goodyear India Ltd. v. State of Haryana AIR 1990 SC 781 , the Supreme Court observed that: It is well-settled that what is the taxable event or what necessitates taxation in an appropriate Statute, must be found out by construing the provisions. The essential task is to find out what is the taxable event. In the present case, we are only concerned with the scope and ambit of one charging Section viz., Section 5 of the OMVT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this shift in the very basis on which the TC tax is levied cannot be brought about by a mere instruction issued by the Commissioner STA, but only by an amendment and that too to the main charging Section itself. This is because in view of the settled legal position, which has been adverted to hereinbefore, there has to be certainty as far as the taxation statutes are concerned. The words have to clearly show an intention to lay the burden and equitable construction of the words is not permissible. In a taxing statute, the words have to be taken exactly as they appear. In the present case, there is no ambiguity insofar as Section 5 of the OMVT Act is concerned, that the TC tax has been collected in respect of vehicles possessed by the dealer under the authorization of the TC . The TC specifies the number of vehicles that can be possessed thereunder. Where the number of vehicles exceeds the said number, then for every such excess vehicle an additional fee is chargeable. For instance, for every ten or less number of vehicles in excess of ten the additional fee chargeable is mentioned. 49. The impugned instruction dated 29th March, 2016 proceeds on the presumption that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be affirmed, then the requirement under Rule 7 of the OMVT Rules, 1976 of the dealers having to give a declaration regarding the number of vehicles possessed under the TC would become entirely redundant. Likewise, the declaration in Form-XIV of the OMV Rules 1993 which also contains a similar declaration would become redundant. The learned Single Judge does not appear to have, while upholding the circular dated 29th March, 2016, discussed either Rule 7 of the OMVT Rules 1976 or Form-XIV of the OMV Rules, 1993. 54. The concept of a TC is that it can be used on several vehicles of the same make and model which are possessed by the dealer under the TC limited to the purposes specified in Rule 41 of the MV Rules. Since the purposes for which the vehicles are used is clearly specified in Rule 41 of the MV Rules, there can be no apprehension of misuse by the dealer of such vehicles for purposes other than Rule 41 of the MV Rules. It will have to be found as a fact that there has been such misuse for which there would have to be an enquiry of some sort preceded by a notice to the concerned dealer. 55. The other significant feature of Section 5 of the OMVT Act is that the tax therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be given to the dealer to show cause as to why the excess TC tax should have been collected since the number of vehicles found in his possession under the TC was contrary to the declarations given by him in Form-XIV appended to the 1993 OMV Rules. Since in any event no such enquiry preceded the issuance of impugned demand notices, they are bad in law on that score as well. Since the demand notices have themselves been held to be bad in law, the TC fees obviously cannot be collected. The TC fees can be collected strictly only in terms of Rule 81 of the MV Rules and only in respect of the vehicles which the dealer has in his possession under the TC. Accordingly, all the impugned demand notices issued to the respective Appellants both for TC tax and TC fees in respect of vehicles possessed and registered in excess of the vehicles covered by the TC issued, are hereby quashed. 58. The next issue to be addressed is the refund of the excess TC tax and TC fees collected by the STA on the strength of the interim order passed by this Court in these appeals in terms of which a stay was granted only vis- -vis the arrears of TC tax and TC fees prior to the impugned notification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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