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2022 (12) TMI 1185 - HC - VAT and Sales TaxValidity of a circular dated 29th March, 2016 issued by the Transport Commissioner-cum- Chairman, State Transport Authority (STA) - direction to collect tax from the dealers/manufacturers of motor vehicles on the basis of total number of vehicles possessed and registered during the entire year by the dealer - Section 2 (8) of the Motor Vehicles Act, 1988 - HELD THAT:- There is merit also in the contention of the dealers that if the interpretation placed by the Transport Commissioner on Section 5 of the OMVT Act, as accepted by the learned Single Judge, were to 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. 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 sustained in law. Accordingly, this Court quashes the impugned instruction dated 29th March, 2016. Validity of the demand notices issued by STA to each of the Appellants on the basis of the impugned instructions dated 29th March, 2016 - HELD THAT:- 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. Refund of the excess TC tax and TC fees collected by the STA on the strength of the interim order passed by this Court - HELD THAT:- The question of refund of this excess amount to the dealer would arise only where that burden has not been passed on by the dealer to the customer. It is for this reason, this Court had in its order dated 18th October, 2022, called for an affidavit from the dealers. The affidavit filed by the dealers is not categorical in this regard. It merely states that “some dealers may have passed on the additional incidence to the customers whereas the others have paid it from their own resources” - it is not possible for this Court to direct refund of excess TC tax and TC fees collected by virtue of the impugned instruction issued by the STA to the RTOs. However, what is clear is that the collection hereafter of TC tax and TC fees on the basis of the impugned instructions dated 29th March, 2016 will have to cease forthwith. Section 5 is both the charging Section as well as the ‘machinery provision’. It indicates that TC tax will become payable in respect of the vehicles possessed by the dealer under the TC certificate and also specifies what is the tax payable if the number of vehicles found in possession under the TC certificate exceeds that number. It also clearly specifies that the tax is to be collected at an annual rate and in advance - Appeal allowed.
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