Vehicle Tax; Chakiat Agencies (P) Ltd. Vs. State [Kerala High Court, 21-05-2012]

Motor Vehicles Act, 1988 – Sections 2 (28), 2 (39) & 2 (46) – Motor Vehicles Taxation Act, 1975 – Section 3 – Motor Vehicle – definition – ‘Trailer and semi trailer – After the Amendment Act 54 of 1994, the term ‘motor vehicle’, does not include a ‘semi-trailer’ and hence cannot be taxed under the Motor Vehicles Taxation Act – the Amendment Act 54 of 1994 does not have retrospective effect, nor it is clarificatory in nature – tax can be collected for a ‘semi trailer’ till the Amendment Act, came into effect on 14.11.1994.

Vehicle Taxation

2012 (2) KLT 955 : 2012 (3) KLJ 84 : ILR 2012 (3) Ker. 247 : 2012 (2) KHC 831

IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.R. RAMACHANDRA MENON, J.

O.P.Nos.27396 OF 2001 & 28929 OF 2001 (J)

Dated this the 21st May, 2012

FOR PETITIONER : BY ADVS.SRI.M.PATHROSE MATTHAI (SR.), SRI.K.P.SREEKUMAR; FOR RESPONDENT(S): R1 TO R3 & R5 BY SPL.GOVT.PLEADER (TAXES), DR.SEBASTIAN CHAMPAPILLY, R4 BY ADVS. SRI.A.K.JAYASANKAR NAMBIAR, SMT.PRIYA MAHESH, SMT.PRIYA MANJOORAN, SRI.E.K.NANDAKUMAR

J U D G M E N T

Whether the dictum in 2001(2) KLT 840 (M/s. Chakkiat Agencies Pvt. Ltd. vs. State of Kerala, as to the liability of the petitioners to satisfy tax under the

Kerala Motor Vehicles Taxation Act, 1976

has lost its significance in virtue of the amendment made to the

Motor Vehicles Act, 1988

as per Act 54 of 1994, particularly defining the terms ‘semi-trailer’ and ‘trailer’ under Sections 2(39) and 2(46) respectively (so as to absolve the petitioners from the liability) is the point sought to be projected. The contention raised by the petitioners is that the amendment is ‘clarificatory’ in nature and hence, though it was introduced as per the Act 54 of 1994, w.e.f. 14.11.1994, it should be applicable right from the beginning and the petitioners are not liable to satisfy any tax in respect of the ‘chassis’ as depicted in Ext.P1.

2. Both the petitioners are shipping and transporting agents, undertaking loading and unloading of cargo into and from the Vessels in the ‘wharf’ area of Cochin Port , which is a Major Port, governed by the provisions of the Major Port Trusts Act, 1963. According to the petitioners, the roads lying within the Port area are not ‘public roads’ coming under the control of the State Government or the National Highways Department, as the case may be, and as such, a particular type of vehicle within the Port area for transporting the Containors/cargo are not liable to be taxed under the Kerala Motor Vehicles Taxation Act (hereinafter referred to as Act) mainly for the reason that it is not a mechanically propelled motor vehicle, but a particular type of carriage having no wheels in the front and have necessarily to be hooked on to the ‘prime mover’ for being pulled on. It is also the case of the petitioners that the owner of the ‘prime mover’ is somebody else, who has paid the tax based on the laden weight of the prime mover, taken together with the maximum weight of the trailers portion, attachable to the prime mover.

3. In connection with the Shipping Agency activities, the petitioner’s company in O.P.No. 27396 of 2001 owned 105 chassis like those as given in Ext.P1, which were being used strictly within the encroached premises of the Port Area to facilitate the movement of cargo from one part of the Port area to another. The above vehicles were imported in 1979 and pursuant to the steps taken by the Joint RTO, Mattancherry, they were got registered, assigning separate Registration numbers in the year 1986. But, subsequent to the registration, the Joint RTO, Mattancherry raised a demand for tax of the chassis for the period from 02.06.1979 onwards, under the Kerala Motor Vehicles Taxation Act, 1976. Since the Appeal and subsequent Revision preferred before the departmental authorities did not turn to be fruitful, it was challenged by filing O.P.No.2365 of 1987 before this Court. A Division Bench of this Court set aside the demand notice and orders in appeal and revision, as per the judgment reported in

United States Lines Agency v. State of Kerala and others, 1988 (1) KLT 259

and directed the concerned authority to decide the primary question, whether the vehicle concerned will come within the definition of ‘motor vehicle’ under section 2(18) of the Motor Vehicles Act, 1939, before proceeding further.

4. Pursuant to the above verdict, the matter was re- considered by the assessing authority, who held that Section 2 (18) of the M.V.Act, 1939 was attracted to the case in hand and imposed the liability to pay tax, which was confirmed in Appeal as well as in Revision. This made the petitioner to approach this Court again, by filing OP.3504 of 1992, which was heard along with the connected cases involving a similar dispute. As per the decision reported in 2001(2) KLT 840 (M/s. Chakkiat Agencies Pvt. Ltd. vs. State of Kerala), a Division Bench of this Court declined interference and the original petitions were dismissed, holding that trailers were also motor vehicles, adapted for use on the roads and hence taxable under Section 3 of the Motor Vehicles Taxation Act, 1976 and that the contention raised by the petitioners that ‘Port area’ was not a ‘public place’, was not correct or acceptable.

5. Being aggrieved of the verdict passed by the Division Bench, the matter was taken up before the Supreme Court by filing SLP No.13316 of 2001, which was dismissed at the admission stage itself, as borne by Ext.P12 order, observing that the case was not a fit one to call for any interference. However, the petitioner was permitted to prefer a representation before the Joint RTO, observing that the payment of tax and registration would be subject to the decision on the representation.

6. After dismissal of the case filed before this Court vide the decision reported in 2001 (2) KLT 840 (cited supra), the Joint RTO issued Ext.P6 demand notice demanding ₹2,15,35,500/- for the period from 01.07.1986 to 30.11.1994 as tax arrears and pursuant to Ext.P7 letter given by the petitioner (in O.P.No. 27396 of 2001), Ext.P8 details were furnished as to the split up figures for the total demand raised. This was followed by Ext.P10(a) and (b) notices issued under the Revenue Recovery Act . Meanwhile, based on the observation in Ext.P12 order passed by the Apex Court dismissing the SLP, the petitioner preferred a representation before the Joint RTO, which however was rejected as per Ext.P15. This was challenged by filing Ext.P16 Appeal, which was dismissed by the appellate authority as per Ext. P17. On further challenge by filing Ext.P18 Revision Petition before the Transport Commissioner, the same was also dismissed as per Ext.P19. The petitioner is challenging all the impugned proceedings, such as Exts.P6, P10(a), P10(b), P15, P17 and P19in the Original Petition (as amended).

7. The petitioner in O.P.No. 28929 of 2001 is stated as the owner of 80 similar ‘Semi Trailers’, used in the wharf area of Cochin Port Trust, for transporting Cargo. These vehicles, as shown in Ext.P1 were infact imported by the predecessor-in- interest in the year 1976-77 and they were registered before the Joint RTO, Mattancherry in the year 1986. The Joint RTO, demanded arrears of motor vehicles tax for the period from January 1977 to 1986 and on challenging the same, the matter was remanded for fresh consideration by the departmental authorities. After re-considering the issue, the Joint RTO passed an order and demanded tax arrears to the tune of Rs. 1,58,79,035/- for the period from 03.01.1977 to 30.06.1986. Meanwhile, ‘6’ Semi Trailers were taken to Tuticorin and the balance ’74’ remained in Cochin. On serving the order, demanding the tax arrears, the predecessor-in-interest filed O.P. No. 215 of 1994, wherein interference was declined and the same was dismissed. Pursuant to dismissal of the said O.P, the petitioner satisfied a sum of Rs.40 lakhs each on 03.07.2001 and 31.07.2001 and ₹78,79,035/- on 16.08.2001 as evident from Exts. P4 to P6 respectively. There was no payment in respect of the subsequent period from 01.07.1986.

8. From 01.04.1990, the petitioner has been filing ‘G’ Forms for exemption of tax for ‘non-use’ under Section 5(i) of the Kerala Motor Vehicles Taxation Act, read with Rule 10 of the Kerala Motor Vehicles Taxation Rules. Since no tax payment was effected by the petitioner in respect of the subsequent period, demand/recovery notices were issued as per Exts.P7 and P7(a) for a sum of ₹1,98,42,710/- for the period from 01.07.1986 to 30.11.1994 by way of Tax, Addl.Tax for the belated payment and also Surcharge at the prescribed rates, which in turn is under challenge in this O.P. In compliance with the condition imposed while granting interim stay of all further steps under Exts.P7/P7 (a), a further sum of ₹40 lakhs is stated as deposited by the petitioner as ordered by this Court.

9. The concerned respondents have filed separate counter affidavits in both the cases, seeking to sustain the impugned proceedings. It is contended that the liability to satisfy Tax in respect of the concerned vehicles like Ext.P1, which are having no wheels in the front, but to be hooked on, to the ‘prime mover’, has already been considered by a Division Bench of this Court and it has been held against the petitioners, as per the decision reported in 2001 (2) KLT 840 (cited supra). It is also stated that the subsequent change by way of amendment to MV Act, 1988, as per the amendment Act, 1994, cannot be pressed into service by the petitioners, as the amendment is having effect ‘only from 14.11.1994’ and hence the petitioners are liable to satisfy the tax from 01.07.1986 to 30.11.1994. It is pointed out that the term ‘Motor Vehicle’ – for fixing the liability under the Kerala Motor Vehicles Taxation Act, by virtue of the stipulation under Section 2(m) of the said Act, has to be read and understood, as it is given in the Motor Vehicles Act, 1939 and any subsequent amendment to the Motor Vehicles Act cannot adversely affect the taxable event. In the counter affidavit filed by the respondents in the O.P.No.27396 of 2001, it is stated that, though the petitioners have stated that they had filed ‘G’ Forms, it was also stated in such proceedings themselves that the vehicles were intended to be used only in the Port area and never on any ‘public road’ and this being the position, the petitioners had no case that the vehicles were never put to use and further that the ‘adaptability to use’ on public road was enough to attract the tax liability, as made clear by a Division Bench of this Court in 2001 (2) KLT 840 (cited supra). In the counter affidavit filed by the respondents in O.P.No.28929 of 2001, it is stated that though the petitioner had filed 74 G Forms in respect of the period from 01.04.1990, they were not in proper form and hence they were not considered.

10. Mr. S. Venkiteswaran, Sr. Counsel led the arguments on behalf of the petitioner in O.P.No.28929 of 2001, while the arguments on behalf of the petitioner in O.P. No.27396 of 2001 were made by Mr. Pathrose Mathai, learned Sr. Counsel. The Court was addressed on behalf of the respondents by Dr. Sebastian Chempapilly, the learned Spl. Government Pleader (Taxes).

11. It is pointed out by the learned Spl. Government Pleader appearing for the respondents, that the issue is squarely covered by the decision rendered by a Division Bench of this Court in one of the petitioners’ case reported in 2001 (2) KLT 840 (cited supra) whereby the liability to satisfy tax in respect of the very same vehicles covered by Ext.P1, under Section 3 of the Taxation Act, stands declared, which has become final by virtue of the dismissal of the SLP preferred by the petitioner as borne by Ext.P12 produced in O.P.No.27396 of 2001. Referring to the specific averments in the counter affidavit, the relevant provisions of law and also the judicial precedents cited across the Bar, it is submitted that the liability to satisfy tax under Section 3 of the Taxation Act is in respect of a ‘motor vehicle’ as defined under the Motor Vehicles Act, 1939 which, in fact has been ‘incorporated by reference’ as given in Section 2(m) of the Taxation of Act. This being the position, the subsequent amendment made in the Motor Vehicles Act, 1939 has no effect at all to the taxable event under the Motor Vehicles Taxation Act, 1976. The learned Sr. Counsel appearing for the petitioners however reiterated that, the decision rendered by the Division Bench in 2001 (2) KLT 840 (cited supra) is only in respect of the period prior to 1987 as observed in the opening paragraph of the judgment, which cannot be treated as a precedent in respect of the subsequent period; more so when the statute has undergone substantial change, particularly with regard to the terms ‘trailer’, ‘semi trailer’ etc. The crux of the contentions raised by the petitioners is that though there is not much difference between definition of the term ‘motor vehicle’ under Section 2(18) of the M.V. Act, 1939 and under Section 2(28) of the M.V.Act, 1988, by virtue of the subsequent amendment effected, as per Amendment Act 54 of 1994, the terms ‘semi trailer’ and ‘trailer’ have been clearly defined in the new M.V.Act, whereby it has been made clear that ‘semi trailer’ is one other than a ‘trailer’. As such, it cannot be a ‘motor vehicle’, as defined under Section 2(28) of the M.V.Act, 1988, though it is an inclusive definition, so as to include any ‘chassis’ over which no body is built and also a ‘trailer’.

12. True, there is a reference in paragraph 1 of the decision in 2001 (3) KLT 840 (cited supra), as to the period ‘prior to 1987’, i.e. with reference to the challenge made against the recovery/demand notices prior to the registration of Ext.P1 vehicles, in view of the admitted fact that no demand or recovery had been initiated in respect of the subsequent period after registration. The crucial question considered by the Court was with reference to the specific pleadings raised by the petitioners, particularly as to the nature of Ext.P1 vehicles, having wheels only at the rear, leaving the front to be hooked on to a ‘tractor’ to be pulled on and also as to the plying of the vehicle exclusively within the ‘port/wharf premises’ and not on any State road or NH. Referring to the various provisions of the M.V.Act, 1939 and also the Taxation Act and analysing the same in the light of the judicial precedents by the Apex Court and such other Courts, the Bench observed in paragraph ‘5’, that the levy is within competence of the State Legislature under Entry 57 in List II of the 7th Schedule of the Constitution. The exact nature of the vehicles as covered by Ext.P1 herein was noted in paragraphs ‘2’ and ‘6’, finally arriving at an inference in paragraph ‘6’ that Ext.P1 vehicle was a ‘motor vehicle’ and then proceeded to consider whether it was exigible to tax in terms of Section 3 of the Taxation Act.

13. Referring to the law declared by the Apex Court in AIR 1992 SC 1371 (M/s. Central Coal Fields Ltd. vs. State of Orissa) and AIR 1992 SC 1376 (Union of India vs. Chowgule & Co. Pvt. Ltd. ), the Bench observed that actual user was not necessary and what was material was whether the vehicle was ‘adapted for use’ on the road . The observation of the Bench in paragraphs 11 and 13 is relevant, which are extracted below:

“11. Going by the position thus emerging, it is clear that the trailers are adapted for use on the roads. They are also motor vehicles coming within the definition of the 1939 Act. There is no case that they have been used on the roads in the State. They have plied exclusively within the area under the control of the Port Trust. But still they would be exigible to tax under S. 3 of the Taxation Act if they are found to be kept for use in the State. The case of the petitioners is that they were not kept for use in the State especially in view of the fact that they were never even got registered as motor vehicles under the Motor Vehicles Act and they were kept for use only for the purpose of carrying the containers from the ships to the godowns within the wharf in the area of the Port Trust. Normally, a motor vehicle which is not registered under the Motor Vehicles Act cannot be said to be kept for use in the State as a motor vehicle. This is the case of the petitioners as well. The order produced in O.P. 3504 of 1992 as Ext. P5 issued by the Joint Regional Transport Officer also suggests that the trailers are used only within the wharf area of Cochin Port Trust and on the roads maintained by the Cochin Port Trust. But this does not indicate that the vehicles are not kept for use in the State. “

13. In