Madras High Court
Rds Projects Ltd. vs Commercial Tax Officer on 2 November, 2006
Equivalent citations: (2007)8VST574(MAD)
Author: A.P. Shah
Bench: A.P. Shah, K. Chandru
JUDGMENT A.P. Shah, C.J.
1. Heard the learned Counsel appearing for the parties. Mr. Haja Nazirudeen, learned Special Government Pleader (Taxes), waives service for the respondent.
2. The writ petitioner/appellant is engaged in the business of carrying works contract for Government projects and is a registered dealer under the Central Sales Tax Act, 1956 as well as the Tamil Nadu General Sales Tax Act, 1959. The petitioner has entered into a contract with Chennai-Ennore Port Road Company Limited for execution of "sea protection works along Ennore expressway in Chennai". For this work, the petitioner has purchased Volvo Hydraulic Excavator (Model: EC 210BLC) and Volvo Hydraulic Excavator (Model: EC360BLC) against "C" form from M/s. Volvo India Pvt. Ltd. As these two machines were to be used for the sea protection works along the Ennore expressway in Chennai, after their purchase, the machines were brought inside the State of Tamil Nadu.
3. For the assessment year 2004-2005, the petitioner reported a total and taxable turnover of Rs. 7,76,53,677 and paid the tax. The respondent, through his proceedings dated April 20, 2006, completed the assessment. Subsequently, however, the respondent has issued a notice dated April 20, 2006 alleging that the petitioner has imported the above referred two excavators and since the petitioner has not filed the returns and paid entry tax as per the provisions of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990, he has proposed to levy entry tax on the purchase value of the excavators to the tune of Rs. 1,33,41,147 at 9 per cent and also proposed to levy a penalty at 150 per cent of the entry tax due.
4. The legality and propriety of the above notice is impugned in the present writ petition on the ground that the notice is wholly illegal and contrary to the provisions of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990. The case of the petitioner is that the above two machines have chained wheels and so, they cannot be transported on roads and therefore, these machines were transported to the Ennore expressway project through trailers. It is the case of the petitioner that the above machines are not motor vehicles or vehicles coming within the definition of Section 2(i) of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990 read with Section 2(28) of the Motor Vehicles Act, 1988.
5. By our order dated September 26, 2006, we directed the respondent to carry out the inspection of the machines and file his report. The respondent has carried out the physical examination of the machines on October 17, 2006 and submitted his report, which reads as follows:
Excavator.-(a) No wheels or tyres were fitted in excavator and also found that no provision for wheels or tyres.
(b) A driver has to operate it.
(c) Chains were mounted as belt on both the sides for movement. On operation, it moves on the earth. It digs and lifts the stones or sand by using bucket and hook.
(d) It runs by diesel.
(e) If it is taken moved on road, it would peel the surface of the road. In other words, it damages the surface of the road with chain belts.
(f) Copy of literature and photocopies of excavator are enclosed.
(g) Copy of two purchase bills enclosed.
(h) Ascertained orally from RTO's office that the registration under Motor Vehicles Act is called for only for the vehicles which are roadworthy.
6. The learned Counsel for the writ petitioner/appellant strenuously contended that the Volvo excavators purchased by the petitioner are not adapted for use upon roads and rather, they are adapted for use in quarry and various construction sites where uneven surfaces of land are found. According to him, the Volvo excavators are vehicles of special types adapted for use only in a factory or in any other enclosed premises and if they are moved on road, they would peel the surface of the road. The learned Counsel submitted that the scope of meaning of the term "motor vehicle" or "vehicle" as defined under Section 2(28) of the Motor Vehicles Act, 1988 has come up for consideration before the apex Court in Bolani Ores Ltd. v. State of Orissa , where the Supreme Court has held that the words "adapted for use" cannot be larger in their import by including vehicles which are not suitable for use on roads. The learned Counsel also drew our attention to a judgment of a Division Bench of the Kerala High Court in Intelligence Officer v. Ray Constructions Ltd. [2006] 147 STC 438.
7. The learned Special Government Pleader (Taxes), on the other hand, submitted that a reading of the definition of "motor vehicle" would clearly show that there is no requirement as per the definition that a motor vehicle should have inflated tyres. The learned Special Government Pleader submitted that the question as to whether the excavator is moving on chain or has inflated tyres is of no consequence since such vehicle is also a motor vehicle adapted for use on public roads. He placed reliance on the decision of the apex court in Bose Abraham v. State of Kerala [2001] 121 STC 614.
8. The short question that falls for our consideration is whether an excavator not running on inflated tyres, but on iron chain plates such as a caterpillar vehicle or a military tank would be a motor vehicle coming within the meaning of Section 2(28) of the Motor Vehicles Act, 1988 read with Section 2(i) of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990 and is, therefore, liable to tax under Section 3 of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990.
9. The term "vehicle" has been defined in Section 2(i) of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990 as follows:
'Motor vehicle' means a motor vehicle as defined in Clause (28) of Section 2 of the Motor Vehicles Act, 1988.
10. Thus, it could be seen that the State Legislature has adopted the definition of "motor vehicle" as defined under Sub-section (28) of Section 2 of the Motor Vehicles Act, 1988, which reads as follows:
'Motor vehicle' or 'vehicle' means any mechanically propelled vehicle adapted for use upon roads, whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer ; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity not exceeding (twenty five cubic centimetres).
11. The scope of Sub-section (28) of Section 2 of the Motor Vehicles Act, 1988 was considered by the Supreme Court in Bolani Ores' case , wherein the court observed as follows:
The question would then arise, are dumpers, rockers and tractors suitable or fit for use on roads ? It is not denied, that these vehicles are on pneumatic wheels and can be moved about from place to place with mechanical power. The word 'vehicle' itself connotes that it is a contrivance which moves. A vehicle which merely moves from one place to another need not necessarily be a motor vehicle within the meaning of Section 2(28) of the Act. It may move on iron flats made into a chain such as a caterpillar vehicle or a military tank. Both move from one place to another but are not suitable for use on roads. It is not that they cannot move on the roads but that they are not adapted, made fit or suitable for use on roads. They would, if used, dig and damage the roads.
(emphasis supplied)
12. Reference may also be made to the decision of the apex court in Central Coal Fields Ltd. v. State of Orissa wherein the apex court held as follows:
...Pictures of various types of dumpers have also been sent to us which indicate prominently one factor that these dumpers run on tyres, in marked contrast to chain plates like caterpillars or military tanks. By the use of rubber tyres it is evident that they have been adapted for use on roads, which means they are suitable for being used on public roads.
(emphasis supplied)
13. The above decisions would categorically show that the apex Court has made a distinction between vehicles fitted with chain plates like caterpillars and military tanks and others. The excavator referred to in Bose Abraham's case [2001] 121 STC 614 (SC) was a motor vehicle fitted with inflated tyres and not chain plates like caterpillars or military tanks. The excavator in question in the present case is mounted on iron plates made into chain such as caterpillar vehicles or military tanks. Such an excavator is used for excavating the earth and loading in lorries and it cannot be used upon public roads, since the roads would get damaged by the chains. The excavator moves around only in work sites and it is not suitable or adapted for use in public roads. This position is also confirmed by the physical verification carried out by the respondent, as seen from his report extracted above. The Kerala High Court in the case of Intelligence Officer, Squad No. IV, Kozhikode v. Ray Constructions Ltd. [2006] 147 STC 438 while considering a similar issue has held that the excavators in question having regard to its distinguishing features from the other excavators has to be held as not "motor vehicle" falling under the definition of the term defined under Section 2(28) of the Motor Vehicles Act, 1988 and therefore, not liable for entry tax. It is relevant to note that the Volvo excavators purchased by the petitioner which is the subject-matter of levy of entry tax are exactly similar to the excavators which were the subject-matter in the above referred reported decision of the Kerala High Court.
14. Under the circumstances, the impugned show cause notice cannot be sustained and it is hereby set aside. The writ appeal is disposed of accordingly. No costs. Consequently, M.P. No. 1 of 2006 is closed.