Jharkhand High Court
Tata Engineering And Locomotive ... vs State Of Jharkhand And Ors. on 29 November, 2002
Bench: S.J. Mukhopadhaya, Topen Sen
JUDGMENT V.K. Gupta, C.J.
1. In this petition filed under Article 226 of the Constitution of India, the petitioner has challenged the order dated 20th April, 2000 passed by Respondent No. 5 in M.V. Revision No. 3 of 2000 whereby and where-under he has, while exercising his power under Section 27 of the Bihar Motor Vehicles Taxation Act, 1994 (1994 Act for short), dismissed the revision petitions filed by the writ-petitioner against the appellate orders passed by the appellate authority, namely, Secretary, Regional Transport Authority cum Deputy Transport Commissioner, Ranchi, on 18.12.1999.
2. The facts leading to the filing of this petition in brief are that the petitioner being a manufacturer of motor vehicles at its Plant in Jamshedpur has been claiming that it is not liable to pay tax under 1994 Act because the petitioner is not a 'dealer' in motor vehicles as contemplated either under 1994 Act or under the Motor Vehicles Act, 1988 (1988 Act for short) and that in any eventuality, the liability of the petitioner to pay tax under 1994 Act would rest either under Section 7 (4) or Section 6 thereof and not under both the sections.
3. Before we proceed to examine the merits of the contentions raised and urged by Shri. R.K. Jain, learned Senior Advocate appearing on behalf of the petitioner, it shall be advantageous to take note of some relevant provisions of 1994 Act. For facility of reference, we re-produce hereinbelow Sections 5, 6 and Sub-section (4) of Section 7 of 1994 Act. These read thus :--
Section 5. Levy of tax--(1) Subject to other provisions of this Act, on and from the date of commencement of this Act, every owner of a registered motor vehicle shall pay tax on such vehicle at the rate specified in Schedule I. (2) Subject to other provisions of this Act, on and from the date of commencement of this Act, every owner of a registered motor vehicle shall pay Additional Motor Vehicles Tax on such vehicle at the rate specified In Schedule II.
(3) The State Government may by notification from time to time, increase the rate of tax specified in the Schedules;
Provided that no such increase shall, during any year exceed fifty per cent of the rate of taxes prescribed in the Schedules.
Section 6. Tax payable by a manufacturer or a dealer.--A tax at the annual rate specified in Schedule III in lieu of the rates specified in Schedule II shall be paid by a manufacturer of or a dealer in motor vehicles, in respect of the motor vehicles in his possession in the course of his business as such manufacturer or dealer under the authorisation of trade certificate granted under the Central Motor Vehicles Rules, 1989.
Section 7. Payment of tax:
(4) In the case of motor vehicles temporarily registered under Section 43 of the Motor Vehicles Act, 1988 the tax for vehicles other than personalised vehicles shall be levied at the rate of 1/12th of the tax payable for the year for such vehicles. In case of extension of the period of temporary registration under the proviso to Sub-section (2) of Section 43 tax at the rate of 1/12th payable for the year shall be payable on every extension of temporary registration for period of 30 days or part thereof:
Provided that for temporary registration of personalised Vehicles rates of tax will be Rs. 50 for a Motor cycle (Including moped, Scooter and Cycle with attachment for propelling the same by mechanical power) and Rs. 100 for a motor car.
4. What, therefore, clearly emerges from a reading of the aforesaid three provisions as contained in 1994 Act, is that under Section 5 of 1994 Act which is a charging Section, every owner of a registered motor vehicle has been made liable to pay tax on such vehicle at the rates as specified in Schedule I of the Act. Section 6 being in a manner an exception or a modification to Section 5 of the Act, lays down that tax at the annual rate specified in Schedule III of the Act in lieu of the rates specified in Schedule I shall be paid by a manufacturer or a dealer in motor vehicles in respect of the motor vehicles in possession of such a manufacturer or such a dealer in the course of his business as such manufacturer or dealer "under the authorization of a trade certificate granted under the Central Motor Vehicle Rules, 1989." Sub-section (4) of Section 7 deals only with the payment of tax with respect to and on motor vehicles temporarily registered under Section 43 of Motor Vehicles Act. 1988. It lays down that the tax with respect to such temporary registered motor vehicles, other than personalized vehicles shall be levied at the rate of 1/12th of the tax payable for the year for such, vehicles. The payment of tax at the rate of 1/12th of the tax payable for a year is relevant because under Sub-section (2) of Section 43 of 1988 Act, a temporary registration is valid for a period of one month and is not renewable. We shall advert to that a little later.
5. Entry 57 of List II (State List) of the VIIth Schedule to the Constitution of India read thus:
'Taxes of vehicles, whether mechanically propelled or not, suitable for use on roads, including tram cars subject to the provisions of entry 35 of List III."
6. The legislative power, therefore, vesting in the State Legislature to make laws based upon Entry 57 (supra) is to impose taxes on vehicles which are suitable for use on roads. It is the undisputed case of the parties that the vehicles manufactured by the petitioner are suitable for use on roads and it is, therefore, in the exercise of powers vesting in the State Legislature under Entry 57 (supra) that under Section 6 of 1994 Act, the Legislature provided and stipulated that the manufacturer or a dealer of a motor vehicle, in respect of the motor vehicle in his possession in the course of his business as such a manufacturer or dealer shall pay tax at the annual rate as specified in Schedule III of 1994 Act. Mr. R.K. Jain, learned senior counsel appearing for the petitioner very vehemently submitted that the expression "dealer" as occurring in Section 2(8) of 1988 Act had undergone a change in 1994, in the sense that whereas before 1994, the expression "dealers" as occurring in the aforesaid subsection (8) of Section 2 of 1988 Act included a manufacturer also within its ambit and scope, by amendment Act No. 54 of 1994, with effect from 14th November 1994, the "manufacturer" was taken out of the purview and scope of the expression "dealer" and, therefore, the aforesaid amendment in Section 2(8) of 1988 Act should mutatis mutandis and ipso facto be also made applicable and read into Section 6 of 1994 Act to exclude a manufacturer from the liability of paying tax under this section. Not only this, Mr. Jain's argument also was that the requirement of possessing a trade certificate and the authorization of such a trade certificate (issued or granted under the Central Motor Vehicles Rules, 1989 being sine qua non to the applicability of Section 6 of 1994 Act with respect to the payment of tax under this section, and the manufacturer of a motor vehicle {not being a dealer) being not entitled to have or obtain a trade certificate in terms of Chapter III of Central Motor Vehicle Rules, 1989 (1989 Rules for short), on this ground also, the manufacturer is liable in law to be taken out of the purview of Section 6 and, thus, it goes outside the taxation net as prescribed under this section Let us now deal with both these arguments of Mr. Jain.
7. In so far as the issue relating to the amendment in Section 2(8) of 1988 Act is concerned, even though the Legislature did take out "manufacturer" from the ambit of the expression "dealer," in our considered opinion, such amendment or alteration in Section 2(8) of 1988 Act would have no effect, substantial or otherwise, upon Section 6 of 1994 Act. We are saying so because we are of the considered opinion that the Legislature consciously, purposefully and intentionally included both the "dealer" as well as the "manufacturer" to fall within the stipulated requirement of law of paying tax under Section 6 of 1994 Act.
1994 Act is independent of 1988 Act. In so far as the liability to pay tax is concerned, any amendment in 1988 Act cannot have any purposeful effect or relevance to 1994 Act. Whether under 1988 Act, the expression "dealer" included a "manufacturer" or not would have no effect or relevance to Section 6 of 1994 Act because in Section 6, the Legislature clearly intended to include both the. "dealer" as well as the "manufacturer" as the persons who would be liable to pay tax under this section. It goes without saying also that 1994 Act has been enacted under and in terms of Entry 57 (supra) by the State Legislature; whereas 1988 Act has been enacted by the Union Parliament under and in terms of Entry 35 of the Concurrent List. Also whereas the Preamble to 1988 Acts states that the Act has been enacted to consolidate and amend the law relating to Motor Vehicles, the Preamble to 1994 Act states that Act has been made with a view to regulate the imposition and levy of tax on Motor Vehicles in the State of Bihar (as it was at the relevant time). Both, the Acts, therefore, deal with two different fields of legislation and areas of their operation are also different, having been enacted by two different classes of Legislatures, one in terms of the power exercisable and vested under Clause (2) and the other in terms of the power vested and exercisable under Clause (3) of Article 246 of the Constitution. Therefore, at the risk of repetition, we have no hesitation in saying that any change or alteration in one Act cannot be said to have any effect upon the other.
8. It so far as the argument relating to the provision pertaining to the grant or authorization of trade certificate is concerned, undoubtedly Chapter III of 1989 Rules does lay down and provide various provisions for the purpose of issuance of a trade certificate from a registering authority to a dealer, and that undoubtedly a trade certificate under 1989 Rules can be issued only to a dealer (which means thus that it may not be issued to a manufacturer). The mentioning of the trade certificate in Section 6 of 1994 Act has relevance only with respect to dealer. The mention of trade certificate in Section 6 of 1994 Act, therefore, cannot be linked directly or indirectly with the manufacturer. The words used in Section 6 are "as such manufacturer or dealer under the authorization of trade certificate." The expression "under the authorization of trade certificate" clearly has a link with a "dealer" and not a "manufacturer." While, therefore, prescribing the requirement of the grant and authorization of a trade certificate, the Legislature clearly knew that whereas a dealer can obtain a trade certificate under 1989 Rules and that a manufacturer does not obtain a trade certificate under 1989 Rules. Whether at one point of time, the expression "dealer" as occurring in 1988 Act included also a manufacturer would be of no help to the petitioner in this case because looking at some of the relevant Rules occurring in Chapter III of 1989 Rules clearly would show that the issuance of trade certificate to a dealer is only to such a person who deals with motor vehicles and that a trade certificate in effect cannot be issued to a manufacturer.
9. In exercise of powers conferred by Sections 28 and other relevant provisions of 1988 Act the Government of Bihar had framed Bihar Motor Vehicles Rules, 1992 (1992 Rules for short). Rule 52-A of 1992 Rules lays down that an application for a certificate of temporary registration is required to be made in form C.R. Temp. A. A look at From C.R. Temp. A clearly convinces us beyond any doubt that it is only a dealer or purchaser who can obtain temporary registration. Rule 52-A readwith From C.R. Temp. A clearly indicates the legislative intent that temporary registration can be granted either to a dealer or to a purchaser and that a manufacturer by itself cannot obtain temporary registration of a motor vehicle. Similarly, the language employed in Section 43 of 1988 Act also suggests legislative intent, clearly and unmistakably that owner of a motor vehicle may apply to any registering authority to have a vehicle temporarily registered. Section 43 of 1988 Act reads thus :
"43. Temporary registration.--(1) Not withstanding anything contained in Section 40, the owner of a motor vehicle may apply to any registering authority or other prescribed authority to have the vehicle temporarily registered in the prescribed manner and for the issue in the prescribed manner of a temporary certificate of registration and a temporary registration mark.
(2) A registration made under this section shall be valid only for a period not exceeding one month, and shall not be renewable;
Provided that where a motor vehicle so registered is a chassis to which a body has not been attached and the same is detained in a workshop beyond the said period of one month for being fitted with a body or any unforeseen circumstances beyond the control of the owner, the period may, on payment of such fees, if any as may be prescribed authority, as the case may be, may allow.
(3) In a case where the motor vehicle is held under hire-purchase agreement, lease or hypothecation, the registering authority or other prescribed authority shall issue a temporary certificate of registration of such vehicle, which shall incorporate legibly and prominently the full name and address of the person with whom such agreement has been entered into by the owner."
10. The term 'owner' has been defined in Clause 30 of Section 2 of 1988 Act which reads thus:
"owner" means a person in whose name a motor vehicle stands registered and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement."
11. Undoubtedly, a manufacturer can be an owner of a motor vehicle. A dealer can also be a owner of a motor vehicle, a purchaser of a motor vehicle can also be the owner of a motor vehicle. But then if a manufacturer claims the right of ownership with respect to a motor vehicle, his status as manufacturer has to be distinguished from his status as an owner of a motor vehicle, because owner of a motor vehicle has to pay tax under Section 5 of 1994 Act at the rates specified in Schedule I of the Act. The expression "owner", therefore, used either in Section 5 of 1994 Act or in Section 43 or Section 2(3) of 1988 Act assigned the meaning to convey and communicate such a person who has purchased the vehicle from a manufacturer or dealer. Undoubtedly, a manufacturer can also claim the right of ownership if a vehicle manufactured by it is used by itself as its owner. It is a common knowledge, based on common sense, that in any situation, a manufacturer or a dealer can retain a vehicle manufactured by it for its own use. It then becomes the owner of a vehicle and has to obtain registration and, thus, falls, within the purview of Section 5 of 1994 Act as well as Section 43 and Section 2(30) of 1988 Act. Once the person therefore, becomes the owner of a motor vehicle, it becomes liable to pay tax under Section 5 of 1994 Act. We are not concerned in this case with that contingency. Here the dispute revolves round the manufacturer's liability to pay tax under Section 6 of 1994 Act. It remains unchanged. Even if a manufacturer becomes an "owner" of a motor vehicle, his liability to pay tax under Section 6 for the period till he remained as the vehicle's manufacturer remains operative. On his acquiring the status of an "owner", the liability is transformed into either Section 5 or Section 7 (4) of 1994 Act, as the situation may warrant.
12. Mr. Jain's argument is that the petitioner being a manufacturer is not liable to pay tax under Section 6 of the Act and that it is liable to pay tax only under Section 7 (4) of the Act. We are unable to agree with this contention as we have already noticed that the manufacturer is liable to pay tax under Section 6 of 1994 Act in his capacity and status as a manufacturer and the tax is paid with respect to the motor vehicle in his possession in the course of his business as such a manufacturer. The manufacturer, as a manufacturer, is not liable to pay tax under Section 7 (4) of 1994 Act. It is only a person who obtains temporary registration of a motor vehicle under Section 43 of 1988 Act who becomes liable to pay tax under Section 7 (4) of the Act. It is up to a manufacturer (if he so wishes) to obtain temporary registration of a motor vehicle under Section 3 of 1988 Act, in which case he becomes liable to pay tax under Section 7(4) of 1994 Act as well. If he, however, does not obtain temporary registration and just sells the vehicle to a dealer or any other person and thereafter such a dealer or such other person may or may not apply for temporary registration. If such a person does apply for temporary registration, he becomes liable to pay tax under Section 7 (4) of 1994 Act. The liability as far as the manufacturer is concerned, in his capacity as a manufacturer alone, is limited to Section 6 of 1994 Act and this liability, based upon the legislative power flowing from Entry 57 (supra) is directly linked to his possessing a motor vehicle as a manufacturer in the course of his business as such a manufacturer.
13. Section 6 when it lays down that the manufacturer or a dealer has to pay tax as per Schedule III in lieu of tax payable as per Schedule I, clearly conveys the meaning of the expression "in lieu of tax payable as per Schedule I" that but for Section 6, a manufacturer or a dealer would also be required to pay tax as per Schedule I because of the mandate contained in Section 5 of 1994 Act. By saying that Section 6 is actually an excepsion to Section 5, what we intend to convey is that even though Section 5 being the general charging section enjoins upon everyone to pay tax as per the rates contained in Schedule I, only for possessing a vehicle in the course of its business as a manufacturer, the manufacturer is required to pay tax as per the rates prescribed in Schedule III. In other words, the liability to pay tax under Section 6 is only linked with the incidence of a manufacturer possessing the vehicle as a manufacturer. This is clearly evident also from the fact that Schedule III prescribes a very very low, just a nominal rate of tax as compared to Schedule I. When we look at Schedule III, comparable with Schedule I, we find that the very low tax rate is indicative of the legislative intent that the tax is not on the event or incidence of either the ownership or the use of the vehicle, but only on the event of the vehicle being possessed as a manufacturer. In fact, the Legislature contemplated that the vehicle would be possessed by the manufacturer for a very brief period before it is sold to the dealer or the other purchaser. The liability of a manufacturer, therefore, to pay tax under Section 6 is independent of the liability both under Section 5 as well as under Section 7 (4). Under Section 5, the liability is for registration. Whereas, therefore, under Section 5 the liability to pay tax arises only after a vehicle has been registered and the liability rests upon the registered owner of such a vehicle, under Section 7 (4) the liability to pay tax arises only when a vehicle gets temporary registration in terms of Section 43 of 1988 Act. Permanent registration of a vehicle is provided for in Section 39 of 1988 Act whereas the temporary registration is under Section 43. It is only after a vehicle is permanently registered under Section 39 of 1988 Act that the liability to pay tax under Section 5 of 1994 Act arises; the liability to pay tax under Section 7 (4) arises only if a vehicle is temporarily registered under Section 43 of 1988 Act. Both Sections 5 and 7 (4), therefore, have a link with registration of the motor vehicle, first with the permanent registration and second with temporary registration. Unlike these two sections, Section 6 has nothing to do with the registration of the vehicle because the liability to pay tax is not linked with the registration of the vehicle, either permanent or temporary. It is actually at a pre-registration stage, the event or the incidence being just the vehicle being possessed by the manufacturer.
14. Lastly Mr. Jain, the learned senior counsel also submitted that Section 23 of 1994 Act is ultra vires because on the question of charging penalty it does not leave out any discretion. We are unable to agree with Mr, Jain's contention with respect to Section 23. Section 23 reads thus :
"23. Liability to pay penalty for nonpayment of tax in time.--If the tax payable in respect of a vehicle other than personalised vehicle has not been paid during prescribed period, the person liable to pay such tax shall pay together with the arrears of tax, a penalty at the rates prescribed by the State Government."
15. A bare look at Section 23 suggests that if the tax payable in respect of a vehicle has not been paid, the person liable to pay tax shall also pay together with the arrears of the tax, penalty at the rates prescribed by the State. Rule 4 of Bihar Motor Vehicles Taxation Rules, 1994 lays down the detailed procedure and the scales of penalty which may be levied upon a defaulting tax payer. Section 2 (i) of 1994 Act defines "prescribed" to mean as prescribed by the Rules made under 1994 Act. Bihar Motor Vehicles Taxation Rules. 1994 are the Rules made by the Government of Bihar in exercise of the Rule-making power in 1994 Act. Therefore, in due compliance of Section 23 of 1994 Act, the Rules having been framed, the penalty provisions have been duly prescribed including procedure for levying the penalty and the scales of penalty. We therefore, find ourselves unable to agree with the aforesaid contention of Mr. Jain.
16. For the foregoing reasons, therefore, the writ petition fails and is accordingly dismissed, but without any order as to costs.
S.J. Mukhopadhaya, J.
I agree.
Tapen Sen, J.
I agree.