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TMI Blog2019 (12) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate of Registration or not? If not, who is liable in this regard? 2. Whether the judgments rendered in the case of Lakhimpur Finvest Company Ltd. (supra), Manish Mukhriya (supra) and Shri Prakash (supra) and/or the judgments rendered in the case of Amar Nath Chaubey (supra) and Shriram Transport Finance Company Limited (supra), lay down the law correctly on the issue framed as Question No. 1?" 2. The Court had issued notice to opposite party No. 4 but inspite of service being sufficient as per Rules of the Court no one has appeared before us to argue the matter on his behalf. 3. We have heard Shri Amol Kumar, learned counsel for the petitioner and Shri Amitabh Kumar Rai, learned Additional Chief Standing Counsel for the State. Facts 4. Although, we are not required to decide any factual issues involved in the writ petition nevertheless a brief narration of relevant facts would help in understanding the issues before us. Petitioner is the Financier who had extended a loan to opposite party No. 4 for purchase of a transport vehicle. The terms of loan were reduced in writing in form of an agreement dated 26.6.2012. It is not in dispute that the agreement involved hypotheca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arisen for our consideration. 5. The vehicle in question is a public service vehicle as per Section 2(o) of the U.P. Motor Vehicles Taxation Act, 1997 read with Section 2(35) of the Motor Vehicles Motor Vehicles Act, 1988, therefore, it is a 'transport vehicle' within the meaning of Section 2(n) of the Act, 1997. Contention of rival parties 6. Contention of Shri Amol Kumar, learned counsel for the petitioner was that since transport vehicle in question was not registered in name of the petitioner-company and it continued to be registered in name of the borrower, therefore, he alone was responsible, and not the Company, for payment of any tax, additional tax and/or penalty. Fact that the vehicle had been possessed by the finance company on 9.12.2014 under a loan/hypothecation agreement was not relevant in this regard in view of Section 9(2) of the Act, 1997 and also in view of the fact that even as per definition of 'Owner' and 'Operator', it is the registered owner who is the 'Owner'. It was also his contention that mere taking of possession by the Financier is not relevant unless Certificate of Registration and other documents are also surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he was the registered owner or had a permit in his name, was irrelevant. In this regard he also relied upon definition of 'Operator' in Section 2(g) of the Act, 1997 which according to him supported his contention. He referred to provisions of Section 13 of the Act, 1997 to contend that after having taken possession of the transport vehicle, petitioner-Financier should have submitted a declaration in Form-A as per Rule 7 of the Rules, 1998 and if it failed to do so it cannot take any advantage of its lapse. In this context he also contended that if the petitioner-Financier claims that the vehicle is not in use as such no tax is required to be paid, then it had to take recourse to Section 12 of the Act, 1997. 8. With reference to Section 20 of the Act, 1997 Shri Rai contended that Section 20 of the Act, 1997 provides for recovery of tax/additional tax/penalty as arrears of land revenue. Section 20(3) of the Act, 1997 provides that the Taxation Officer shall raise a demand in the form as may be prescribed, from the 'Owner' or 'Operator', as the case may be, for arrears of tax and additional tax and penalty of each year, which shall also include arrears o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 20(3) of the Act, 1997, thus, provides for raising of a demand from the 'Owner' or 'Operator, determining their liability, as the case may be, which means that the Taxation Officer while raising a demand has to fix the liability of payment of tax under the scheme of the Act, 1997 otherwise, the definition of 'Operator' or 'Owner' in the Act, 1997 as in the manner defined may have no relevancy. It was submitted that thus, while raising a demand under Section 20(3), Taxation Officer is required to fix liability of the person liable to pay the tax for the period it is due. 11. According to him Section 50 of the Act, 1988 relates to transfer of ownership of motor vehicle which does not get attracted in the present case and the relevant provision which is attracted is Section 51 relating to motor vehicles under hypothecation/lease/hire-purchase agreement. In this regard he contended that Petitioner-finance company did not take any steps in terms of Section 51(5), as such, it is not open for it to say that unless the Financier becomes the registered owner it is not liable to pay taxes, specially as, being in possession of the vehicle, a Financier is lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 273 and J. Jeyasingh v. Deputy Commercial Tax Officer, 1993 Legal Eagle 837. Discussion on Question No. 1 13. U.P. Motor Vehicles Taxation Act, 1997 (hereinafter referred to as 'the Act, 1997') is a Taxing Statute which as per its long title provides for imposition of tax and additional tax in the State of Uttar Pradesh on motor vehicles engaged in transport of passengers and goods for hire. Motor vehicles to which it applies, are regulated by an enactment of Parliament known as the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act, 1988'). Rules known as Central Motor Vehicles Rules, 1989 (hereinafter referred to as 'the Rules, 1989) have been made by the Central Government, under the Act, 1988. U.P. Motor Vehicles Rules, 1998 (hereinafter referred to as 'the Rules, 1998) have also been made by the State Government under the Act, 1988. 14. Before referring to provisions of the Act, 1997, it would be fruitful to refer to relevant provisions of the Act, 1988 especially those relating to registration of motor vehicles as contained in Chapter-IV and some of the definitions contained in Chapter-I. The Act, 1988 and Rules, 1989 15. Section 39 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r vehicle for recording transfer of ownership in the Certificate of Registration by the registering authority. This is required when the motor vehicle changes hands due to sale, or inheritance or purchase in public action conducted by the Government. It lays down penal consequences for non reporting of such transfer. The Rules corresponding to Section 50 are Rules 55, 56 and 57 of the Rules, 1989. Section 50 is as under: "50. Transfer of ownership.--(1) Where the ownership of any motor vehicle registered under this Chapter is transferred,-- (a) the transferor shall,-- (i) in the case of a vehicle registered within the same State, within fourteen days of the transfer, report the fact of transfer, in such form with such documents and in such manner, as may be prescribed by the Central Government to the registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee; and (ii) in the case of a vehicle registered outside the State, within forty-five days of the transfer, forward to the registering authority referred to in sub-clause (i)-- (A) the no objection certificate obtained under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 177 such amount not exceeding one hundred rupees as may be prescribed under sub-section (5): Provided that action under Section 177 shall be taken against the transferor or the transferee or the other person, as the case may be, where he fails to pay the said amount. (4) Where a person has paid the amount under sub-section (3), no action shall be taken against him under Section 177. (5) For the purposes of sub-section (3), a State Government may prescribe different amounts having regard to the period of delay on the part of the transferor or the transferee in reporting the fact of transfer of ownership of the motor vehicle or of the other person in making the application under sub-section (2). (6) On receipt of a report under sub-section (1), or an application under sub-section (2), the registering authority may cause the transfer of ownership to be entered in the certificate of registration. (7) A registering authority making any such entry shall communicate the transfer of ownership to the transferor and to the original registering authority, if it is not the original registering authority." 21. Rule 55 of the Rules, 1989 which is relevant, is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted only as a consequence of such transfer of ownership of motor vehicle. 24. A separate and special provision has been made regarding motor vehicles subject to hire-purchase, lease or hypothecation agreement and transactions based thereon, in Section 51. Rules corresponding to it are Rule 60 and 61 of the Rules, 1989. Section 51 is as under: "57. Special provisions regarding motor vehicle subject to hire-purchase agreement, etc.--(1) Where an application for registration of a motor vehicle which is held under a hire-purchase, lease or hypothecation agreement (hereafter in this section referred to as the said agreement) is made, the registering authority shall make an entry in the certificate of registration regarding the existence of the said agreement. (2) Where the ownership of any motor vehicle registered under this Chapter is transferred and the transferee enters into the said agreement with any person, the last registering authority shall, on receipt of an application in such form as the Central Government may prescribe from the parties to the said agreement, make an entry as to the existence of the said agreement in the certificate of registration and an intimation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 81 or for the issue of duplicate certificate of registration under sub-section (14) of Section 41, or for the assignment of a new registration mark under Section 47, or removal of the vehicle to another State, or at the time of conversion of the vehicle from one class to another, or for issue of no objection certificate under Section 48, or for change of residence or place of business under Section 49, or for the alteration of the vehicle under Section 52, make an application to the person with whom the registered owner has entered into the said agreement, (such person being hereafter in this section referred to as the financier) for the issue of a no objection certificate (hereafter in this section referred to as the certificate). Explanation.--For the purposes of this sub-section and sub-sections (8) and (9), "appropriate authority" in relation to any permit, means the authority which is authorised by this Act to renew such permit and, in relation to registration means the authority which is authorised by this Act to issue duplicate certificate of registration or to assign a new registration mark. (7) Within seven days of the receipt of an application under sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financier that such entry has been made. (11) A registering authority registering the new vehicle, or issuing the duplicate certificate of registration or a no objection certificate or a temporary certificate of registration, or issuing or renewing, a fitness certificate or substituting entries relating to another motor vehicle in the permit, shall intimate the financier of such transaction. (12) The registering authority where it is not the original registering authority, when making entry under sub-section (1) or sub-section (2), or cancelling the said entry under sub-section (3) or issuing the fresh certificate of registration under sub-section (5) shall communicate the same to the original registering authority." 25. Rule 60 and 61 of the Rules, 1989 are as under: "60. Endorsement of hire-purchase agreements, etc.--An application for making an entry of hire-purchase, lease or hypothecation agreement in the certificate of registration of a motor vehicle required under sub-section (2) of Section 51 shall be made in Form 34 duly signed by the registered owner of the vehicle and the financier and shall be accompanied by the certificate of registration and the appropriate fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usly on making the termination entry in the Certificate of Registration and Form 24). To The Registering Authority We hereby declare that the agreement of Hire-Purchase/Lease/Hypothecation entered into between us has been terminated. We, therefore, request that the note endorsed in the Certificate of Registration of Vehicle No. ........... in respect of the said Agreement between us be cancelled. The Certificate of Registration together with the fee is enclosed. Date...............Signature of thumb impression of Registered owner Date................Signature of the Financier with official seal and address *Strike out whichever is inapplicable. Office endorsement Ref. Number........................... Office of the...................... The cancellation of the entry of an agreement as requested above is recorded in this office Registration record in Form 24 and Registration Certificate on ....................... (date). Date...............Signature of Registering Authority To The Financier ............................... ............................... The Registering Authority .................. .................. (To be sent to both the above parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date................ Signature of the financier Specimen signatures of the financier: 1. ........................ 2. ....................... Copy to the original registering authority * Strike out whichever is inapplicable." Form-37 referable to Section 61(3) is as under: "FORM-37 [See Rule 61(3)] Notice to the Registered Owner of the Motor Vehicle to surrender the Certificate of Registration for cancellation and issue of fresh Registration Certificate in the name of the Financier (To be made in duplicate and duplicate copy to be sent to the financier simultaneously on issue of notice) Office of the Registering Authority.............................. Ref. Number............................ Dated...................... Shri/Smt./Kumari ............................. (Regd. Owner) is/are hereby informed that......................... (financier) has/have reported that he/they have taken possession of the Motor Vehicle bearing registration number.................... covered by an agreement of Hire-purchase/Lease/Hypothecation, owing to your default under the provisions of the said agreement and that; *(1) You have refused to deliver the Certificate of Registration t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity to tax and penalty under the Act, 1997. The Act, 1997 and Rules, 1998 32. Tax on such motor vehicles which are registered under the Act, 1988, is required to be paid as per the Act, 1997. 33. Section 4 of the Act, 1997 is the taxing provision. In respect of motor vehicles other than a transport vehicle a one-time tax is to be paid at the rate applicable in respect of such motor vehicles subject to the provisos to the said section. In respect of other vehicles, monthly, quarterly, or annual tax is required to be paid under Section 4(1-A) to (3), subject to the provisos to the said provisions. 34. Section 4-A deals with levy of special tax in respect of certain vehicles covered by temporary permit. Section 6 deals with additional tax on public service vehicle. Section 4 of the Act, 1997 is as under: "4. Imposition of tax.--(1) Save as otherwise provided in this Act or the rules made thereunder, no motor vehicle other than a transport vehicle, shall be used in any public place in Uttar Pradesh unless a one-time tax at the rate applicable in respect of such motor vehicle, as may be specified by the State Government by Notification in the Gazette has been paid in respect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nthly tax at such rate as may be notified by the State Government is paid in respect thereof: Provided that in respect a motor vehicle under this sub-section instead of monthly tax, a quarterly or an yearly tax at such rate as may be notified by the State Government may be payable. (2-B) Where any reciprocal agreement relating to taxation of goods carried by road is entered into between the Government of Uttar Pradesh and any other State Government or a Union Territory, the levy of a tax under sub-section (1-A) or sub-section (2) shall, notwithstanding anything contained in the said sub-section, be in accordance with the terms and conditions of such agreement: Provided that the tax so levied shall not exceed the tax which would otherwise been levied under the Act. (3) Where any motor vehicle other than a transport vehicle is found plying as a transport vehicle, such tax therefore as may be notified by the State Government, shall be payable." 35. Various Sub-sections of Section 4 deal with various categories of vehicles. Sub-section 1 deals with motor vehicles other than transport vehicles. Sub-section (1-A) to (3) deals with transport vehicles of various categories such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fifteenth day of each calendar month next following; (b) the special tax payable under Section 4-A in respect of vehicles covered by temporary permit issued for the conveyance of passengers on special occasions, such as to and from fairs and religious gathering or to carry marriage parties, tourist parties or such other reserved parties shall be paid at the time of issuance of such temporary permit. (2) When any person transfers a motor vehicle registered in his name to any other person, then without prejudice to the liability of the transferor in this regard, the transferee shall be liable to pay the arrears of tax, additional tax and penalty, if any, in respect of motor vehicle so transferred, due on or before the date of its transfer, as if the transferee was owner of the said motor vehicle during the period for which such tax, additional tax or penalty is due. (3) Where the tax or additional tax in respect of a motor vehicle is not paid within the period specified in sub-section (1), in addition to the tax or the additional tax due, a penalty at such rate not exceeding the due amount as may be prescribed, shall be payable, for which the owner and the operator if any shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferee (deemed owner) are liable to pay tax, additional tax and penalty due on or before the date of its transfer as per option of the Taxation/Recovery Officer, leaving them to sort out their claims inter se, as per law. 43. The object of the provision is to facilitate smooth-realization of tax/revenue by the State in a case of transfer of a vehicle. The rationale behind such provision is that whosoever purchases a vehicle should satisfy himself that all taxes etc. in respect thereof have been duly paid by the transferor. If not, he should ask him to do so before the transfer takes place. This secures the interest of revenue under the Act, 1997. However, if he does not do so, then, he buys not only the vehicle but also the liability to pay tax etc. even for the period prior to such transfer, knowingly. 44. The sine qua non of Section 9(2) is that it applies to transfer of a vehicle by the registered owner, to any other person. If the transfer is not by the registered owner and it is not to any other person then Section 9(2) will not apply. Secondly, it deals with liability to pay tax etc. due on or before the date of such transfer but not after such transfer. 45. The term ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be jointly and severally liable. The use of the words 'in addition to the tax or the additional tax due' followed by the words 'a penalty......' leaves no doubt that the provision not only makes the 'Owner' and 'Operator', if any, jointly and severally liable with regard to the 'penalty' but also with regard to 'tax or additional tax due'. The use of the words - 'where the tax or additional tax in respect of a motor vehicle is not paid within the period specified in Sub-section 1......' is indicative of the fact that the provision speaks of liability to pay arrears of tax and additional tax. 50. Thus, it is the 'Owner' and the 'Operator', if any, of a motor vehicle who is liable to pay the tax or the additional tax due within the period specified in Section 9(1) in respect of a motor vehicle, and the penalty, if any, as well as the arrears thereof in the event of its non payment within such period. If in respect of a vehicle there is an 'Owner' and an 'Operator', both, then they are jointly and severally liable. 51. Section 9(3) speaks of 'Owner' and 'Operator'. It does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Pradesh Motor Vehicle Taxation Act in respect of the motor vehicle described below and for the registration of the said motor vehicle under the Motor Vehicles Act. 1. Full Name of owner..........son/daughter/wife/husband of...... 2. Permanent Address......................... 3. Temporary address (if any).............. 4. Year of manufacture........................ 5. Engine Number or Motor number in respect of Battery operated vehicle 6. Chassis Number....................:......... 7. Category of Vehicle.......................... (If motorcycle, then with gear or without gear) 8. Type of vehicle- (a) Non-transport vehicle (Motorcycle/Motor car/Omni/Bus/Tractor-trailer/Institutional Bus/Private service vehicle/Construction equipment vehicle/Specially designed vehicle. 9. Unladen weight............................. 10. Laden weight ............................. 11. Seating capacity (including driver) 12. Engine Capacity (c.c.) 13. Fuel used...................................... 14. Type and colour of body 15. For transport vehicle only- (a) front axle (b) rear axle (c) any other axle (d) tandem axle (e) number, description and size of ty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or hypothecation agreement as also the borrower in such possession. This aspect shall be further dealt with hereinafter while considering Section 2(h) and 2(g) which define 'Owner' and 'Operator'. 55. The contents of Form-A are also indicative of the fact that it is imperative on the part of such person to get the vehicle registered in his name and submit such declaration. Its contents are to be read in consonance with the substantive provision contained in Section 13 read with Rule 7 and not in conflict with it. 56. Thus, tax under the Act, 1997 is on the vehicle and has to be paid before its use. 57. The tax payable is thus determined in terms of Section 4 read with Section 9 based on the aforesaid declaration under Section 13 read with Rule 7 depending upon the category of the vehicle and the use to which it is to be subjected. 58. Reference may also be made in this regard to Rule 18(1) and (2) according to which the Taxation Officer on receiving information that a person is keeping or operating a motor vehicle, may require him to furnish a declaration in Form-'A' in respect thereof and may serve upon him at once a special notice in Form-'E' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declaration under Rule 7 or 8 has to be the one who has 'become possessed' of the motor vehicle as is mentioned in Rule 7 which will include a possession by the Financier under a hire-purchase, lease or hypothecation agreement as also such possession by the borrower. This aspect shall be further dealt with hereinafter. 61. Another provision which is relevant for our purpose is Section 20 which reads as under: "20. Recovery of tax.--(1) Arrears of any tax or additional tax or penalty payable under this Act shall be recoverable as arrears of land revenue. (2) The tax, the additional tax and penalty payable under this Act shall be first charge on the motor vehicle including its accessories, in respect whereof it is due. (3) The Taxation Officer shall raise a demand in the form as may be prescribed from the owner or operator, as the case may be, for the arrears of tax and additional tax and penalty of each year, which shall also include the arrears of tax, additional tax or penalty, if any, of preceding years." 62. The recovery envisaged under Section 20 therein is of arrears of tax, additional tax or penalty. These are recoverable as arrears of land revenue. The ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of seizure or detention of the Vehicle, the Transport Commissioner may, without prejudice to any other action that may be taken under this Act, cause the vehicle to be sold by public auction in the manner prescribed and the sale proceeds of such vehicle shall be adjusted towards the tax, additional tax, the penalty or the other amount due in respect of such vehicle and the expenses, if any, of such auction and the balance, if any, shall be refunded to the owner of the operator of the vehicle." 65. Section 20(3) of the Act, 1997 is also in consonance with the provisions contained in Section 9(3), as, it obligates the Taxation Officer to raise a demand for tax etc. in the form as may be prescribed from the 'Owner' or 'Operator', as the case may be. Now, the words 'as the case may be' have been understood to mean 'depending upon the circumstances' or 'as the situation may be' or 'whichever is appropriate in the events which happen'. Reference may be made in this regard to the decision of the Supreme Court in the case of Subramaniam Shanmugham v. M.L. Rajendran and others, (1987) 4 SCC 215. 66. Thus, the language used in Section 20(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate (if any) is not produced within the above prescribed time, the due amount shall be recovered as arrears of land revenue under the provisions of Section 20 of the aforesaid Act. Date....... Signature of Taxation Officer Region/Sub-region............... Copy to Financer (if any) for information and necessary action. 1. Name of the Financer 2. Address.................. Date......... Signature of Taxation Officer Region/Sub-region............" 68. Although, Section 20(3) refers to owner or operator, as the case may be, the notice issued under corresponding Rule 18(3) in Form-E-1 is addressed to the 'registered owner' obviously as the Registering Authority's/Taxation Officer's records would contain his name. Thus, even under Rule 18(3) there is a reference to liability of 'Owner' or 'Operator', as the case may be, as is referred in Section 20(3), which is tune with the use of the words 'Owner or Operator', if any, in Section 9(3). 69. This view is further fortified by a reading of Section 12 of the Act, 1997. Sub-section 1" of Section 12 speaks of 'any person' in the context of non use of vehicle and refund of tax rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such person is a minor, the guardian of such minor;" 72. The definition of 'Owner' applies to 'motor vehicles'. As the term 'motor vehicle' occurring in Section 2(h) of the Act, 1997 in the context of the definition of 'Owner' has not been defined in the Act, 1997 it takes within its sweep all motor vehicles irrespective of their sub-categories in view of Section 2(28) of the Act, 1988 read with Section 2(o) of the Act, 1997. It includes transport vehicles. 73. In the definition of 'Owner' in Section 2(30) of the Act, 1988, which has been quoted earlier, the words 'and in relation to a motor vehicle' have been used, whereas, in Section 2 of the Act, 1997 the words 'where such vehicle is' have been used in the context of a vehicle being under a hire-purchase, lease or hypothecation agreement. In Section 2(30) the opening line starts with the words 'unless the context otherwise requires' whereas, it is not so in Section 2(h). Except for these differences, which are not relevant in the context of the questions referred to us, the two definitions are similar. 74. The definition of 'owner' contained in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Certificate of Registration or not. If the vehicle is not the subject of such agreement it is the person whose name is entered in the Certificate of Registration who is the owner. The analogy is the same as in Purnya Kala Devi's case (supra), though, the context is different. 77. The intention of the Legislature is clear that the registered owner should not be held liable to tax etc. if the vehicle is not in his possession and control instead it is in the possession of someone else under the agreements referred hereinabove who would become its owner based on such possession, except of course if there are arrears of tax etc. for the period during which he was in possession and control. 78. The provision contained in Section 2(h) is in two parts. The first part refers to the registered owner, whereas, the second part refers to the person in possession under the agreements referred therein. There is no reference to 'registered owner' in the second part of Section 2(h). Thus, the person in possession under the second part even if he is not the registered owner, yet, he falls within the definition of 'Owner' as contained in Section 2(h). It does not require the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person in whose name the motor vehicle has been registered refers to the registered owner and not the entry made in such Certificate with regard to the Financier as is mentioned in Section 41 of the Act, 1988 which has already been discussed earlier. Any other understanding of the said words would be incongruous to the object and scheme of the Act, the provision contained therein and would make it unworkable. 82. 'Operator' is defined in Section 2(g) of the Act, 1997 as under: "(g) "operator" in respect of a transport vehicle means a person whose name is entered in the permit or in an authorisation certificate issued under the Uttar Pradesh Motor Vehicles (Special Provisions) Act, 1976, and where there is no such permit or authorisation certificate, the person whose name is entered in the Certificate of Registration in respect of such vehicle, and where the transport vehicle is the subject of a hire purchase agreement, the person in possession of the vehicle under that agreement and where any such person is a minor, the guardian of such minor;" 83. The definition of operator applies only to transport vehicles. The term 'transport vehicle' is defined in Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner' and Operator under Section 9(3) of the Act, 1997. 88. Having discussed the term 'Owner' and 'Operator' as appearing in the Act, 1997, their meaning and scope, we proceed to discuss their joint and several liability as prescribed in Section 9(3). 89. As per Section 9(3) the liability to pay tax, additional tax and penalty under the Act, 1997 is upon the owner and the operator, if any, jointly and severally. 90. Joint and several liability referred in Section 9(3) applies when there is an 'Owner' and 'Operator' both. It is only when both of them exist that the concept has any application, not otherwise. This is borne out from the use of the words 'if any' after the words 'Owner' and 'Operator' in Section 9(3), which means, 'if there is any such operator', as, the Legislature was conscious of the fact that the Act, 1997 did not envisage an 'Operator' in respect of 'motor vehicles other than transport vehicles', though it did so in respect of a 'Transport Vehicle'. Hence, the use of the words 'if any' in Section 9(3). 91. The Act, 1997 does not envisage an 'Operator' fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out from a reading of the decision of the Supreme Court in the case of Khenyei (supra) wherein the phrase 'jointly and severally liable', its purport and import came up for consideration. The decision of the Madras High Court in the case of J. Jeyasingh (supra) is also relevant in this regard. 93. Now, in a scenario involving 'transport vehicles', in respect to which, the Act, 1997 envisages two persons i.e. the owner and operator, liability to arrears of tax, additional tax and penalty being joint and several under Section 9(3) of the Act, 1997 as already discussed, considering the object and rationale behind such principle of joint and several liability and its incorporation by the Legislature in Section 9(3) of the Act, 1997, which is a taxing statute, either can be held liable for the entire liability irrespective of his/their share of the liability, leaving the parties to sort out and work out their relative and respective liabilities inter se, as per law. 94. As already stated, as per Section 20(3) read with Rule 18(3), the Taxation Officer is required to raise a demand in prescribed Form from the 'Owner' or 'Operator', as the case may be. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax from the date of taking possession of the vehicle under the agreements referred earlier, even if, its name is not entered in the Certificate of Registration, or not? If hot, who is liable in this regard. 98. As regards liability to pay tax etc. from the date of taking possession, in respect of a 'motor vehicle other than a transport vehicle', the Financier becomes its owner under Section 2(h) when he takes possession of the vehicle under an agreement of hire-purchase, lease or hypothecation, irrespective of the fact whether he is the registered owner or not as already discussed, and as thereafter he alone can use it, as such, he is liable to pay tax, additional tax and penalty which fall due for payment after such possession i.e. current tax and additional tax including arrears arising in respect thereof and penalty if any from the date of such possession. 99. He is in possession of the vehicle on which there is a statutorily ordained 'first charge' for the tax etc. due under the Act in view of Section 20(2) of the Act, 1997, therefore, he is liable from the date of possession. 100. Moreover, as already discussed, even as per Rule 7 of the Rules, 1998 once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility will continue with the registered owner, as was in fact argued by Shri Amol Kumar, especially when, it did not intend to use the vehicle and intended to get the benefit of Section 2 of Section 12 of the Act, 1997. However this argument is fallacious for the reason which follows. 105. Apart from the reasons already given, this argument would not be available to the Financier for the simple reason that from the date of such possession of the vehicle it becomes the owner under Section 2(h) and if the vehicle is under a hire-purchase agreement its 'Operator' also under Section 2(g), may be, alongwith the registered owner or permit holder or holder of authorization certificate, as the case may be. The ownership or operatorship based on possession as is referred in Section 2(h) and Section 2(g) is not dependent on the name of such person in possession being entered in the Certificate of Registration as its registered owner etc., as already discussed, and as is also evident from the provisions themselves. 106. Moreover, if the Certificate of Registration or token is not given by the registered owner, such Financier, under Sub-section 5 of Section 51 of the Act, 1988 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of such vehicle on account of breach of agreement by the borrower (registered owner), then, whether in this scenario the Financier would be liable for these arrears in respect of such vehicle under Section 9(3) and 20(3)? 109. Section 9(3) and 20 of the Act, 1997 speak of liability to pay tax etc. which has not been paid in time i.e. arrears thereof and recovery of such arrears of tax etc., not only of the current year, but, also of preceding years. The liability is on the 'Owner' or 'Operator', if any, jointly and severally, under Section 9(3) and 'as the case may be' under Section 20(3). These phrases have already been discussed by us earlier. 110. As already stated, in the case of 'a motor vehicle other than a transport vehicle, as, one time tax is required to be paid, that too, at the time of registration of the vehicle, without which, it would not be registered nor can it be used, there would normally not be any dispute relating to liability to pay such arrears nor regarding their recovery. 111. In the case of a 'transport vehicle', both the 'Owner' and 'Operator' would be jointly and severally liable under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the motor vehicle which is in possession of the Financier. In such a scenario the Taxation Officer can proceed against the Financier to recover the arrears accordingly. The Financier may in order to avoid attachment and sale of the vehicle pay the arrears and, if possible, recover the amount from the borrower by adopting such legal remedies as may be prescribed and permissible, but, it cannot escape the rigour of Section 20(2) read with Section 22 of the Act, 1997. As stated earlier, under Section 22 if such a vehicle regarding which tax etc. have not been paid has been or is being used it can be detained and if the tax due is not paid within forty-eight hours it can be put to public auction and sale proceeds derived from it can be used to satisfy the dues. 114. Thus, process of recovery can be adopted for arrears of tax due in respect of such vehicle, including arrears for the period prior to taking of possession of the transport vehicle by the Financier in this manner by detaining and selling the vehicle in possession of the Financier, unless the Financier chooses to avoid such action by paying the arrears. In such an eventuality he can, if possible, recover the payment from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles other than a transport vehicle' liability regarding arrears in respect thereof would be practically Nil as one time tax is paid. If a dispute regarding liability to pay arrears of tax etc. in respect of motor vehicles other than transport vehicles does arise it will have to be determined keeping in mind the enunciation of the law as aforesaid. The Financier on taking possession of the vehicle will be liable accordingly. 119. It is not out of place at this stage to mention that when the registered owner (borrower) is in arrears of tax etc. then intimation of such arrears and the liability of the registered owner to pay such arrears of tax is sent not only to the registered owner but is also sent to the Financier under Rule 18(3) read with Form E-I of the Act, 1997, as quoted earlier, on his address, meaning thereby, the Financier can avoid such further liability by taking suitable action either for possession of the vehicle treating it to be a breach of agreement, if there is any such condition in the agreement or, they can avoid such liability by ensuring such conditions being incorporated in the agreements with the borrower. Question No. 1 is answered accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue which the provision seeks to protect. The Division Bench in Amar Nath Chaubey's case (supra) did not consider Section 9(3) at all. The provisions of Section 50 and 51 are a consequence of an otherwise valid transfer of a movable property in law and they by themselves do not constitute a prior requirement for a valid transfer as already held by us hereinabove. There is nothing in Section 51 or any other provision of the Act, 1988 to persuade us to hold that a lease, hire-purchase or hypothecation agreement is determined or terminated only when recourse is taken to Section 51. In fact, Section 51(3) is to the contrary and it applies where both the parties to the agreement have determined the agreement and they are required to apply under the said provision with proof of termination of such agreement which negates the proposition advanced by the Division Bench. The liability of a Financier who takes possession of a vehicle to pay tax etc. including arrears thereof is unrelated to the factum of its name being entered in the Certificate of Registration, as already opined by us. The Division Bench in Amar Nath Chaubey's case (supra) has also observed that in the event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of the Financier under such agreement. All that is necessary is the possession of the motor vehicle. If it has been taken by the Financier under such agreement, he would be liable, of course, alongwith the operator, if any, jointly, and severally. 125. Moreover, for the reasons already given, neither the provisions of Section 50 and 51 nor the corresponding Rules contained in Rule 61 regarding entry of name in the Certificate of Registration or issuance of fresh certificate to Financier have any relevance whatsoever so far as liability in such a scenario to pay tax, additional tax or penalty under Sub-Section 3 of Section 9 read with Section 20 of the Act, 1997 is concerned. If the action under Section 51(3) and/or (3) read with Rule 61(2) is held to be a necessary prerequisite for liability to tax etc. then it would render part of definition of 'Operator' and 'Owner' regarding possession meaningless and superfluous in this context, as, such eventuality would in any case be covered by the first part of Section 2(h) and second part of Section 2(g). The words 'Owner' and 'Operator' occurring in Section 9 and 20 have to be read in consonance w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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