Karnataka High Court
M/S Icici Bank Limited vs The Joint Commissioner For on 22 March, 2018
Author: S.Sujatha
Bench: S.Sujatha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF MARCH, 2018
BEFORE
THE HON'BLE MRS.JUSTICE S.SUJATHA
W.P.Nos.9217 & 39154 - 39157/2014 c/w
W.P.Nos.9218 & 39158 - 39161/2014,
W.P.No.9219/2014, W.P.No.9220/2014 &
W.P.No.9221/2014 (T - MVT)
IN W.P.Nos.9217 & 39154 - 39157/2014:
BETWEEN :
M/s ICICI BANK LIMITED
NOW AT MYTREE CENTRE,
NO.4/101, HOSUR ROAD,
BOMMANAHALLI, BANGALORE-560 068
REP. BY ITS AUTHORISED SIGNATORY
Mr. YOGESH NAGANNA
AGED ABOUT 32 YEARS. ...PETITIONER
(BY SMT.JAI M. PATIL, ADV.)
AND :
1. THE JOINT COMMISSIONER FOR
ROAD TRANSPORT RURAL AND
URBAN DIVISION, MSIL HOUSE,
7TH FLOOR, CUNNINGHAM ROAD,
BANGALORE-560 025
2. THE REGIONAL TRANSPORT OFFICER
BANGALORE (WEST), RAJAJINAGAR,
BANGALORE-560010.
3. Mr. MUSHRAFF
FATHERS NAME NOT KNOWN
AGED ABOUT 40 YEARS,
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R/AT HAISONS BUILDING
SIDDIAH ROAD,
NEAR URVASI THEATRE
LALBAGH ROAD,
BANGALORE-560 027
NOW AVAILABLE AT
NO.49, PARK STREET,
FIRST BLOCK WEST, JAYANAGAR,
BANGALORE-560 011 ...RESPONDENTS
(BY SRI T.K.VEDAMURTHY, AGA FOR R-1 & R-2.)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED ORDER DATED 04.12.2013 IN APPEAL NO.1 (TAX)
2011-12 PASSED BY THE R-1 AT ANNX-E.
IN W.P.Nos.9218 & 39158 - 39161/2014:
BETWEEN :
M/s ICICI BANK LIMITED
NOW AT MYTREE CENTRE,
NO.4/101, HOSUR ROAD,
BOMMANAHALLI, BANGALORE-560 068
REP. BY ITS AUTHORISED SIGNATORY
Mr. YOGESH NAGANNA
AGED ABOUT 32 YEARS. ...PETITIONER
(BY SMT.JAI M. PATIL, ADV.)
AND :
1. THE JOINT COMMISSIONER FOR
ROAD TRANSPORT RURAL
AND URBAN DIVISION
MSIL HOUSE, 7TH FLOOR,
CUNNINGHAM ROAD,
BANGALORE-560 025
2. THE REGIONAL TRANSPORT OFFICER
BANGALORE (WEST), RAJAJINAGAR,
BANGALORE-560021.
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3. Mr. MUSHRAFF
FATHERS NAME NOT KNOWN
AGED ABOUT 40 YEARS,
R/AT HAISONS BUILDING
SIDDIAH ROAD, NEAR URVASI THEATRE
LALBAGH ROAD, BANGALORE-560 027
NOW AVAILABLE AT
NO.49, PARK STREET,
FIRST BLOCK WEST, JAYANAGAR,
BANGALORE-560 011 ...RESPONDENTS
(BY SRI T.K.VEDAMURTHY, AGA FOR R-1 & R-2.)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED ORDER DATED 04.12.2013 IN APPEAL NO.2 (TAX)
2011-12 PASSED BY THE R-1 AT ANNX-E.
IN W.P.No.9219/2014:
BETWEEN :
M/s ICICI BANK LIMITED
NOW AT MYTREE CENTRE,
NO.4/101, HOSUR ROAD,
BOMMANAHALLI, BANGALORE-560 068
REP. BY ITS AUTHORISED SIGNATORY
Mr. YOGESH NAGANNA
AGED ABOUT 32 YEARS. ...PETITIONER
(BY SMT.JAI M. PATIL, ADV.)
AND :
1. THE JOINT COMMISSIONER FOR
ROAD TRANSPORT RURAL AND
URBAN DIVISION, MSIL HOUSE,
7TH FLOOR, CUNNINGHAM ROAD,
BANGALORE-560 025
2. THE REGIONAL TRANSPORT OFFICER
BANGALORE (WEST), RAJAJINAGAR,
BANGALORE-560021.
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3. Mr. MUSHRAFF
FATHERS NAME NOT KNOWN
AGED ABOUT 40 YEARS,
R/AT HAISONS BUILDING
SIDDIAH ROAD, NEAR URVASI THEATRE
LALBAGH ROAD, BANGALORE-560 027
NOW AVAILABLE AT
NO.49, PARK STREET,
FIRST BLOCK WEST, JAYANAGAR,
BANGALORE-560 011 ...RESPONDENTS
(BY SRI T.K.VEDAMURTHY, AGA FOR R-1 & R-2.)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DATED 04.12.2013 PASSED BY THE R-1 AT
ANNEXURE-E TO THE WRIT PETITION.
IN W.P.No.9220/2014:
BETWEEN :
M/s ICICI BANK LIMITED
NOW AT MYTREE CENTRE,
NO.4/101, HOSUR ROAD,
BOMMANAHALLI, BANGALORE-560 068
REP. BY ITS AUTHORISED SIGNATORY
Mr. YOGESH NAGANNA
AGED ABOUT 32 YEARS. ...PETITIONER
(BY SMT.JAI M. PATIL, ADV.)
AND :
1. THE JOINT COMMISSIONER FOR
ROAD TRANSPORT RURAL AND
URBAN DIVISION, MSIL HOUSE,
7TH FLOOR, CUNNINGHAM ROAD,
BANGALORE-560 025
2. THE REGIONAL TRANSPORT OFFICER
BANGALORE (WEST), RAJAJINAGAR,
BANGALORE-560010.
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3. Mr. MUSHRAFF
FATHERS NAME NOT KNOWN
AGED ABOUT 40 YEARS,
R/AT HAISONS BUILDING
SIDDIAH ROAD, NEAR URVASI THEATRE
LALBAGH ROAD, BANGALORE-560 027
NOW AVAILABLE AT
NO.49, PARK STREET,
FIRST BLOCK WEST, JAYANAGAR,
BANGALORE-560 011 ...RESPONDENTS
(BY SRI T.K.VEDAMURTHY, AGA FOR R-1 & R-2;
R-3 SERVED AND UNREPRESENTED)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DATED 04.12.2013 PASSED BY THE R-1 AT
ANNEXURE-E TO THE WRIT PETITION.
IN W.P.No.9221/2014:
BETWEEN :
M/s ICICI BANK LIMITED
NOW AT MYTREE CENTRE,
NO.4/101, HOSUR ROAD,
BOMMANAHALLI, BANGALORE-560 068
REP. BY ITS AUTHORISED SIGNATORY
Mr. YOGESH NAGANNA
AGED ABOUT 32 YEARS. ...PETITIONER
(BY SMT.JAI M. PATIL, ADV.)
AND :
1. THE JOINT COMMISSIONER FOR
ROAD TRANSPORT RURAL AND
URBAN DIVISION, MSIL HOUSE,
7TH FLOOR, CUNNINGHAM ROAD,
BANGALORE-560 025
2. THE REGIONAL TRANSPORT OFFICER
BANGALORE (WEST), RAJAJINAGAR,
BANGALORE-560021.
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3. Mr. MUSHRAFF
FATHERS NAME NOT KNOWN
AGED ABOUT 40 YEARS,
R/AT HAISONS BUILDING
SIDDIAH ROAD, NEAR URVASI THEATRE
LALBAGH ROAD, BANGALORE-560 027
NOW AVAILABLE AT
NO.49, PARK STREET,
FIRST BLOCK WEST, JAYANAGAR,
BANGALORE-560 011 ...RESPONDENTS
(BY SRI T.K.VEDAMURTHY, AGA FOR R-1 & R-2.)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DATED 04.12.2013 PASSED BY THE R-1 AT
ANNEXURE-E TO THE WRIT PETITION.
THESE PETITIONS HAVING BEEN HEARD AND
RESERVED ON 27.02.2018, COMING ON FOR
PRONOUNCEMENT OF ORDER THIS DAY, S.SUJATHA J.,
PASSED THE FOLLOWING:
ORDER
These batch of matters are directed against the order of the Joint Commissioner for Transport (Rural and Urban Division)/Appellate Authority, whereby the payment of arrears of tax relating to 5 stage carriages for the period from 01.01.2005 to 31.03.2010 has been confirmed.
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2. Since common questions are involved, the petitions are heard together and disposed of by this common order.
3. The petitioner is a bank who had financed for purchase of the vehicles in question to one Sri.V.G.Nagabhushana, the registered owner committing default in payment of loan, the petitioner- bank being the financier, took possession of the said vehicles. The RTO had proceeded against the petitioner- bank for payment of arrears of tax relating to the subject vehicles on the ground that the petitioner-bank took possession of the said vehicles and continued to be in possession of the said vehicles during the relevant period. The demand made by the RTO was confirmed by the Appellate Authority. Against which, Writ Petition Nos.26040/2012 and connected matters were filed. This Court by order dated 06.12.2012, set aside the order of the Appellate Authority and remitted the matters for -8- fresh consideration in accordance with law. Pursuant to which, the Appellate Authority has passed the common Judgment dated 04.12.2013. Aggrieved by the same, the petitioner has filed the writ petitions.
4. Learned counsel Smt.Jai M. Patil, appearing for the petitioner-bank would submit that the Appellate Authority passed the order mechanically without application of mind much against the directions issued by this Court in W.P.Nos.26040/2012 and connected matters. It is the contention of the learned counsel that the vehicles in question were sold to the third respondent and material was placed before the Appellate Authority to establish the same. However, the Appellate Authority failed to consider the payment receipts produced by the petitioner which was deposited by the third respondent towards purchase of vehicles. The action of the first respondent in dismissing the appeal on the ground that the petitioner has not -9- obtained fresh registration certificate before selling the vehicles is erroneous and has resulted in miscarriage of justice. The first respondent erred in not calling upon the second respondent to prove that the vehicles were in the custody of the petitioner-bank when this court specifically remanded the matter for this particular purpose, the first respondent rejected the contention of the petitioner, placing reliance on the judgment of the Hon'ble Apex Court in the case of STATE OF KARNATAKA V/S. GOPALAKRISHNA SHENOY, reported in 1987 (2) KAR LJ 266, which is not applicable to the facts of the present case. Thus, it was argued that the demand of the tax made by the Authorities against the petitioner when the vehicles are not in possession of the petitioner is unjustifiable and contrary to the provisions of the Act. It was further contended that the respondent Authorities demanding tax as well as penalty amount is illegal. According to her unless there is conviction, no penalty can be demanded.
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5. Learned counsel relied on the following judgments:
1. 'VINAYAKA BHAT v. STATE BY ASSISTANT REGIONAL TRANSPORT OFFICER' reported in ILR 1993 KAR 176;
2. HEAD MASTER, 'BHARAT MATHA SCHOOL v.
STATE OF KARNATAKA' reported in [2013] 4 KLJ 412; and
3. 'ARIF MUNEWAR v. THE REGIONAL TRANSPORT OFFICER, JAYANAGAR, BANGALORE AND OTHERS' reported in [1998] 5 KLJ 131.
6. Learned Additional Government Advocate Sri.T.K.Vedamurthy, appearing for the respondent Nos.1 and 2 justifying the impugned orders, submitted that the vehicles in question were taken possession by the petitioner-bank and the declaration of nonuse made by the bank was provisionally accepted by the Authorities. It was noticed by the Inspector of Motor Vehicles that
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the subject vehicles were removed from the declared place of garage. No permission was obtained for removing the vehicles from the declared place of garage and there is contravention of the condition of the Government Notification No.HTD/70/TMA/2003 dated 06.08.2003. Hence, the intimation of nonuse was revoked and the petitioner was called upon to pay the tax from 01.01.2005 to 30.09.2006. Since the amount of tax has not been paid, charge sheet was filed before the Competent Court wherein the petitioner has admitted the liability and credited the tax demanded. Hence, the demand notice has been issued by the Authorities calling upon the petitioner-bank to pay penalty of Rs.53,592/- for the period from 01.01.2005 to 30.09.2006 under Section 12-B of the Act. Arrears of tax amount with penalty under Section 12-B amounting to Rs.7,34,976/- for the period from 01.10.2006 to 31.03.2010 has been demanded. On remand order passed by this Court, after providing an opportunity of
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hearing to the petitioner-bank, Appellate Authority has arrived at a decision that the petitioner-bank is liable to pay the arrears of tax along with penalty during the period in question in terms of Section 2(30) of the Motor Vehicles Act, 1988 ('MV Act' for short), the petitioner is the owner of the vehicles as long as the HPA (Hypothecated Agreement) noted in the records stands between the owner and the financier. The petitioner continues to be in possession of the vehicles in question unless necessary transfer is made in the registration certificate. There being no such transfer effected in the registration certificate, possession of the vehicles are deemed to be with the petitioner-bank. As such, the demand of tax and penalty made by the Authorities are in accordance with law.
7. Reliance is placed on the following decisions:
a) STATE OF KARNATAKA V/S.
K.GOPALAKRISHNA SHENOY, reported in
1987 (2) KAR LJ 266; and
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b) VIJAYAKUMAR MANE V/S. THE REGIONAL
TRANSPORT OFFICER, DHARWAD AND
OTHERS, reported in 2000 (2) Kar. L.J. 78.
Respondent No.3 though served in W.P.No.9220/2014, remain unrepresented.
8. Having heard the learned counsel appearing for the parties and perusing the material on record, it is apt to refer to Sections 4 and 9 of the Karnataka Motor Vehicles Taxation Act, 1957 ('Act, 1957' for short) which reads thus:
"4. Payment of tax. - (1) The tax levied under Section 3 shall be paid in advance by the registered owner or person having possession or control of the motor vehicle, for a quarter, half-year or year, at his choice, [within [fifteen days] from the commencement of such quarter, half-year or year, as the case may be;] [Provided that the tax in respect of vehicles specified in item 1 and 14(2) of Part 'A' of the Schedule shall be paid annually subject to such conditions as may be specified by the Government from time to time:]
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xxxxx (2) In case of half yearly and annual payments, or payments for the period of five years or ten years such rebate in respect of the tax as may be prescribed shall be granted.
(3) Notwithtstanding anything contained in the proceeding sub-sections, the tax levied under the proviso to sub-section (1) of Section 3, shall be paid in advance in a lumpsum by the registered owner or person having possession or control of the motor vehicle and the tax so paid shall be for the life time of the vehicle:
Provided that the motor cycle in respect of which the tax is already paid under sub- section (1) of Section 3 prior to the First day of April, 1986, tax specified under the first proviso to sub-section (1) of Section 3 shall be levied after the expiry of the period for which the tax paid under sub-section (1) and such tax shall be paid within one month from the date of expiry of the said period:
xxxx
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(4) Whenever there is a revision of tax, the difference of tax for the month or part thereof shall be paid at the rate of 1/3rd of the quarterly tax, or 1/12th of the annual tax payable on or before the last date fixed under sub-section (1) for payment of tax for the next quarter, or the year as the case may be.
9. Liability to pay arrears of tax. -
(1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before having paid the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall be liable to pay the said tax to the Taxation Authority.
(2) Nothing contained in this section shall be deemed to affect the liability of the person, who has transferred the ownership or has ceased to be in possession or control of the vehicle, to pay the said tax."
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9. The Scheme of the Act, 1957 postulates that Section 3 is the charging section, Section 4 contemplates that tax levied under Section 3 shall be paid in advance by the registered owner or person having possession or control of the motor vehicle, for a quarter, half-year or year, at his choice. Section 9 provides that the person to whom the ownership of the vehicle has been transferred or the person who is in possession or control of such vehicle shall be liable to pay the said tax to the Taxation Authority. Section 2(30) of the MV Act contemplates that a person in whose name the motor vehicle stands registered, where such a 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 shall be the owner. Thus, the burden lies on the petitioner-
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Bank to establish that the petitioner is not the owner of the vehicles in question or not in possession of the vehicles. The possession or control of the vehicle depends on the records maintained by the Authority. A registered owner continues to be liable for payment of motor vehicle tax up to the date when he ceases to be the owner. Registration certificate showing the vehicle hypothecated to the financier from owner and the financier having taken possession of the vehicle for non- payment of loan installments intimated the nonuse of vehicle to the authorities, thereafter selling the vehicles for recovery of the arrears from the owner without getting the permission from the Authorities for removing the vehicle from the declared place sans effecting transfer in the records maintained by the Authority would not absolve the petitioner from the liability of tax in terms of Sections 4 and 9 of the Act, as aforesaid. If the registration certificate speaks about the possession of the vehicles in question, the same cannot be ignored.
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10. This court in the case of VIJAYAKUMAR MANE supra, has held thus:
"10. The liability of the registered owner and person in possession and control of the vehicle is joint and several. The primary obligation to pay motor vehicle tax is on the registered owner. In law there is a presumption that an owner has possession and controls of the property or asset owned. If he parts with the possession and control either voluntarily in pursuance of any agreement/arrangement, or non-voluntarily but in pursuance of any agreement/arrangement, his liability to pay tax does not cease, so long as he continues to be the registered owner. The person who takes possession and control, either as a lessee or as a financier becomes liable to pay the taxes, as a co-obligant.
11. In this case, the motor vehicle tax is due for the period 1-4-1996 to 30-6-1997. The vehicle was seized by KSFC on 16-3-1996. Though it is stated that the vehicle has been
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returned by KSFC to petitioner, the date on which the vehicle has been returned to petitioner is not disclosed. Petitioner, as registered owner, will be liable to pay the motor vehicle tax for the entire period, irrespective of the fact whether he had possession and control or not. The liability of KSFC to pay the tax will be joint and several, along with petitioner from 1-4-1996 to the date when it returned possession and control of the vehicle to the petitioner. KSFC will have no liability to pay the motor vehicle tax from the date on which it returned possession and control to the petitioner. It is in these circumstances, the Appellate Authority has remanded the matter to first respondent to determine the extent of liability of KSFC, that is the period for which KSFC is jointly and severally liable to pay the motor vehicle tax in regard to the vehicle. As rightly held by the Appellate Authority, as intimation of non-use was not given till 21-5-1997, there is a statutory obligation, both on the part of the petitioner and KSFC to pay the taxes for the period 1-4-1996 to 30-6-1997, having regard
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to Sections 4 and 9. After such payment it is open either to the petitioner or KSFC who pays the said taxes, to seek refund on the ground that the vehicle was not under use. There is no infirmity in the order of the Appellate Authority.
12. Strong reliance is placed by the petitioner on four unreported decisions of this Court, to contend that during the period when the vehicle is seized by the financier and is in the possession and control of the financier, the registered owner is not liable to pay the tax and the financier alone is liable to pay the tax. The decisions are R.G. Bawdekar v Regional Transport Officer; L. Krishna Murthy v Special Tahsildar for Prevention of Unauthorised Constructions and Recoveries ; Shivakumar it Regional Transport Officer, Mandya and R.B. Patil v Regional Transport Officer, Davanagere. The last three cases merely follow the decision in Bawdekar's case. Bawdekar's case and L. Krishna Murthy's case arose during the period when Motor Vehicles Act, 1939 was in force. The
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other two decisions relate to the period when Motor Vehicles Act, 1988 is in force. The decision in Bawdekar's case is short and may conveniently be extracted in full.-
''This matter is disposed of at the stage of preliminary hearing after notice to respondent.
2. The petitioner was the owner of the public carrier vehicle bearing Regn. Mark MYL-7025. It was hypothecated to Shivayogi Murugendraswamy Urban Co-operative Bank Limited, Athani, Belgaum District. The vehicle was seized apparently for default in repayment of loan by the hypothecatee on 18- 6-1987. Thereafter, the hypothecatee has filed Form No. 30 claiming non-user with effect from 1-12-1987 by the application filed which is found in the records produced by the learned Government Pleader. That the vehicle was seized by the Bank on 18-6-1987 has not been disputed by the rospondent-RTO, Chikkodi, Belgaum District, The petitioner has questioned the legality and correctness of the demand of Rs. 8,140/- as at Annexure-B as
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arrears of motor vehicle tax due on the vehicle for the period 1-7-1987 to 31-7-1988 inter alia on the ground that he was not the owner of the vehicle having the custody or possession and use and as such not liable to pay taxes. He has also filed Annexure-A true copy of the affidavit filed on behalf of the hypothecatee dated 29th November, 1988 wherein it has admitted that it took the custody of the vehicle on 18-6-1987 at which point of time the tax was paid by the petitioner. Therefore, there is no further liability on the part of the petitioner to pay tax on the vehicle in question.
3. The tax must be collected for the period for which it is due from hypothecatee who is the owner in possession of the vehicle. Therefore, the demand impugned-notice is clearly without the authority of law and is liable to be quashed insofar as the petitioner is concerned.
4. Rule may issue accordingly and be made absolute".
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12.1 The learned Single Judge who decided the matter did not refer to the provisions of Sections 4 and 9 of the Act. On the other hand, he proceeded on the basis that the hypothecatee who took possession of the vehicle became "the owner in possession of the vehicle" and having regard to the definition of the term 'owner' under Section 2(19) of the Motor Vehicles Act, 1939 apparently proceeded on the basis that the hypothecatee as such owner in possession became liable to pay the tax. As noticed above, the definition of the term 'owner' in Section 2(30) of the Motor Vehicles Act, 1988 is completely different from the definition of the term 'owner' in Section 2(19) of the Motor Vehicles Act, 1939. Under 1939 Act, 'ownership' purely depended on the possession of the vehicle. But under the 1988 Act, 'ownership' depends on the registration of the vehicle and only in certain limited cases, on possession and control. The decision in Bawdekar's case, supra, which does not take note of Sections 4 and 9 of the Karnataka Motor Vehicles Taxation Act, 1957,
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and which was decided when the Motor Vehicles Act, 1939 was in force, is therefore of no assistance, to now decide the liability of the registered owner to pay motor vehicle tax. The decision in L. Krishna Murthy's case, supra, which merely follows Bawdekar's case and which also related to a period when Motor Vehicles Act, 1939 was in force, is also of no assistance to the petitioner.
12.2 It is no doubt true that in the decisions in Shivakumar's case, supra, and R.B. Patil's case, supra, this Court was dealing with cases which arose after Motor Vehicles Act, 1988 came into force. But, those decisions merely followed the decision in Bawdekar's case without noticing Sections 4 and 8 of the Karnataka Motor Vehicles Taxation Act and without noticing that the definition of the word 'owner' has undergone significant change under the Motor Vehicles Act, 1988 which had come into effect by the time the said two cases were decided. Hence, the decisions in Shivakumar's case, supra, and R.B. Patil's case are also not relevant as they
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do not lay down any proposition that a registered owner is not liable to pay motor vehicle tax.
12.3 As none of the decisions has referred to Sections 4 and 9 of the Karnataka Motor Vehicles Taxation Act, 1957 which specify the persons who are liable to pay the current motor vehicle tax as also the arrears of motor vehicle tax, they have to be held as having been rendered per incuriam and are therefore of no assistance to decide whether a registered owner is liable to pay motor vehicle tax during the period when the vehicle is under the possession and control of the financier.
11. In the light of the said Judgment, it is clear that a person who takes possession and control, either as a lessee or financier becomes liable to pay the taxes, as a co-obligant. In the absence of transfer effected in the registration certificate as regards the sale made by the petitioner-Bank in favour of respondent No.3, or in
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other words, the petitioner continues to be owner or in possession of the vehicle in terms of Registration Certificate, his liability to pay taxes do not cease, the same cannot be considered to be legal to fix the liability on respondent No.3 as the registered owner. There is a presumption in law that the Registered owner in terms of Section 2 (30) of the Act is in possession of the Motor Vehicle. This view is supported by the Judgment of the Hon'ble Apex Court in GOPALAKRISHNA SHENOY's case supra, the factual situation was that the first respondent therein, sold his goods vehicle to the second respondent but neither of the respondents reported the transfer of the vehicle to the Regional Transport Officer in compliance of Section 31 of the MV Act. After it has come to the notice of the RTO the tax payable for the vehicle was due, demand notice was issued to the first respondent therein, to pay the arrears of tax together with penalty which was refuted on the ground that he has transferred the vehicle to the second respondent. A
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demand notice was then issued to the second respondent and he too refuted his liability to pay the arrears of tax on the plea that the vehicle was not in a fit condition and it has been lying in a workshop during the relevant period. Since both the respondents failed to pay the arrears of tax, the Transport Authorities filed a complaint against them under Section 3(1) read with 12(1)(a) of the Taxation Act before the Chief Judicial Magistrate, Mangalore which culminated in the judgment of this Court and the same was challenged before the Hon'ble Apex Court. In that context, it is held that as long as registration certificate of a motor vehicle is current, such vehicle is liable to tax under Section 3[1] of the Act and no duty is cast upon the registering Authority to establish whether the motor vehicle has been plied on public road or otherwise. It has been observed that since the transfer of the vehicle had not been reported to the Authorities, the first respondent therein, was as much liable as the second respondent
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therein, to pay the arrears of tax that was demanded. This judgment is squarely applicable to the facts of the present case.
12. This Court in the case of VINAYAKA BHAT supra, has observed that existence of a motor vehicle is a condition precedent for levy of tax under the Act. This Judgment was rendered in the context of the arguments advanced by the petitioner therein that vehicle was very old and it was scrapped, not in existence. The obligation of the petitioner to intimate that the vehicle has been scrapped under Section 34[1] of the MV Act was not complied with. Placing reliance on the Division Bench Judgment of this Court in Writ Petition No.1807/1966, it was held that though there is an obligation on the petitioner to intimate that the vehicle has been scrapped under Section 34[1] of the MV Act, but, that requirement is not relevant for the purpose of levy of tax under the Taxation Act. The respondent has to enquire
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and determine as a question of fact whether the motor vehicle was in existence during the relevant period. This Judgment would not lend any assistance to the petitioner for the reason that the question involved herein is not relating to the non existence of a vehicle during the relevant period, but the transfer said to have been made by the petitioner in favour of Respondent No.3 i.e., transfer of ownership of the vehicle or the petitioner-Bank not in possession or control of such vehicle. Mere transaction of sale effected by the petitioner-Bank without reporting to the Authorities/no necessary transfer effected in the registration certificate cannot be countenanced.
13. Similarly, in the case of 'BHARAT MATHA SCHOOL supra, this Court while considering the question whether registration certificate indicates that the bus in question is stage carriage bus as on the date of checking and on the said basis demand notice issued
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directing the petitioner therein to pay the tax treating the bus as stage carriage was set aside since no opportunity was given to the petitioner therein to put forth its case before the Authorities. No law is laid down that no proceedings can be initiated on the basis of the registration certificate.
14. In ARIF MUNEWAR supra, this Court considering Section 9, 4[1] and 3 of the Act, observed that in addition to the registered owner of the vehicle, liability to pay tax of the person who is really in possession and control of the vehicle. If the vehicle owner is not in possession, it may be said or argued that he is not liable to pay. But, Section 9 of the Act per se reveals that once a vehicle has been transferred by person, i.e., registered owner thereof, before making payment of tax leviable on the motor vehicle or he ceased to be in possession or control of the vehicle, then the person to whom the ownership of the vehicle has
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been transferred or the person who is in possession and control of the vehicle, it is his liability to pay the said unpaid taxes, if any. It is thus clear that once the vehicle has been transferred and it is in possession of the transferee, the tax can be realized from the transferee or the person who is in possession of the vehicle. The fact of transfer has to be established in accordance with law. Indisputably, transfer of the vehicle is not recorded in the registration certificate relating to the vehicles in question. Thus, for the purposes of the Act, there is no transfer in the eye of law and as such deemed possession continues with the petitioner/Bank during the relevant period. Hence, this Judgment also would not support the arguments of the petitioner.
15. Section 12 of the Act deals with 'penalties'. Section 12-B deals with composition of offences. No penalty under Section 12[1][a] of the Act is levied in the
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present set of facts. In the demand notice, it is explicitly made clear that the petitioner can compound the offence punishable under section 12[1] and [3] of the Act on payment of such sum of money to the Prescribed Officer in lieu of prosecution. On demand of tax being confirmed, proceedings can be initiated under Section 12(1)(a) of the Act-1957. Rule 29 of the Karnataka Motor Vehicles Taxation Rules prescribes, the Transport Authority to inform the person who is accused of an offence punishable under Section 12(1)(a) of the Act in as much as penalty prescribed by way of composition for the offence with which he is accused, within 7 days from the date of service of such notice. Quantum of penalty is prescribed under the same Rule. Any person aggrieved by an order made under Rule 29 can file an appeal under Rule 31. Hence, the petitioner cannot raise any grouse against the demand of penalty made under Section 12-B of the Act. There is no irregularity or infirmity in the order of the Appellate Authority in
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rejecting the refund of tax and penalty amount deposited by the petitioner relating to the period 2006 - 2010. For the period 2005 - 2006, the action was initiated under Section 12[1][a] of the Act before the jurisdictional Criminal Court, whereby on the memo of settlement filed by the parties, in view of the tax amount being discharged by the petitioner-Bank, the said proceedings came to be dropped, thereby an acquittal order has been passed in the criminal proceedings. In such a scenario, demanding further penalty for the period 2005 - 2006 is unjustifiable. The same cannot be sustained. Hence, the following:
ORDER
1. The demand made towards penalty relating to the year 2005 - 2006, in respect of five vehicles in question is quashed;
2. The demand of tax and penalty relating to the years 2006 - 2010, in respect of five vehicles in question is confirmed.
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Writ petitions stands disposed of in terms of the above.
Sd/-
JUDGE ln./NC.