Judgment:
ORDER
D.V. Shylendra Kumar, J.
1. Writ petitioner is a financier who had financed certain amounts to a registered motor vehicle - a maxi cab bearing CTX No.6435 registered with the 1st respondent office of the Regional Transport Officer, Udupi.
2. It appears the vehicle was seized by the petitioner for non-payment of the borrowed amount by the respondents and took possession of the vehicle.
3. It is the version of the petitioner that he had submitted a communication and thereafter he had surrendered the documents of the vehicle with the 1st respondent end that had also been accepted by the 1st respondent. It is also the further case of the petitioner that the petitioner had indicated the place of parking of the vehicle for enquiry etc., by the authority. It appears that the authorities had inspected the place of such parking of the vehicle as on 28.2.2003 and the Motor Vehicle Inspector had reported that the vehicle was not found in the place. It is thereafter that the 1st respondent took action by issuing a show-cause notice dated 26.4.2003 calling upon the petitioner to show cause as to why tax should not be demanded from the petitioner for the period 1.6.1995 onwards as the vehicle was not found in the place where it was supposed to have been stationary. Version of the petitioner is that a reply to this, inter alia, pointed out that as the vehicle had become not road worthy, it was sold as scrap and in terms of a reply dated May'03, and sought for dropping of the proceedings. The said reply was not accepted and petitioner was called upon to take steps to comply with the requirements of law, if the vehicle was not road worthy, then for seeking cancellation of the registration certificate etc., in terms of a reply dated 27.1.2005. This was followed by the demand dated 31-5-2005 calling upon the petitioner to pay taxes for the period from 1-7-1995 up to 30-6-2005 totaling a sum of Rs. 1,88,046/- and penalty of a sum of Rs.37,610/- in all demand for Rs. 2,25,656/-; that the amount should be deposited within seven days from the date of receipt of the notice failing which action in accordance with law will be taken.
4. Petitioner aggrieved by this demand preferred an appeal before the 2nd respondent - Deputy Commissioner for Transport, Shimoga Division, Shimoga.
5. The appellate authority, on verification and perusal of the appeal grounds etc., found that as a matter of fact when the Motor Vehicle Inspector of the department visited the garage on 28-2-2003 where the petitioner had reported that the vehicle had been parked, it was not in the place and had made a report to this effect and therefore rejected the submission of the counsel for the appellant that the demand was not immediately followed after the inspection, in the light of the earlier show cause notice dated 26-4-2003.
6. Though considerable reliance was placed on the decision of the Supreme Court in the case of State of Karnataka v. K Gopalakrishna Shenoy and Anr. reported in AIR 1987 SC Ml, the appellate authority found no justification for interference with the demand raised by the Regional Transport Officer and accordingly dismissed the appeal affirming the demand in terms of the order dated 23-3-2006 [copy at Annexure-E].
7. It is aggrieved by this order, the present writ petition.
8. Notice had been issued to the respondents and respondents are represented by Mrs. Niloufer Akbar, learned Additional Government Advocate. Statement of objections has also been filed and so also additional statement of objections.
9. Pleadings being complete, the matter is taken up for filial hearing for which purpose, rule is issued.
10. Submission of Sri. Nagesh, learned counsel for the petitioner is that the demand raised is illegal; that the petitioner being a financier had no use of the vehicle to operate it on the road; that the vehicle having been found not roadworthy had been scrapped long back; that as the vehicle was not in existence, no liability can be foisted which was not in existence nor was used on the road and therefore the demand is bad in law.
11. In support of the submission, learned Counsel for the petitioner seeks to place reliance on the decision of this court in the case of Muniswamy v. State by Regional Transport Officer reported in ILR 2006 KAR 32 as also another decision of this court in the case of A.S. Vinayaka Bhat v. State of Karnataka reported in 1992(4) KLJ 478.
12. Reliance is also placed on yet another unreported Judgment of this court, copy of which is produced as Annexure-F rendered in W.P. No. 11538/2003 dtd. 30-5-2003
13. The sum and substance of these decisions is that there cannot be any liability if the vehicle is not in existence in which event it could not have been used on the roads etc.,.
14. The question is not so much about whether the vehicle was in existence or not. It is a matter for verification based on which can be recorded a finding of fact which can be proved before the authorities and not a matter which is required to be gone into, by this Court in writ jurisdiction.
15. Be that as it may, what is submitted on behalf of the respondents by the learned Additional Government Advocate is that the liability for payment of tax in respect of all motor vehicles which are capable of being used on roads and which have been registered is the absolute liability in terms of the charging Sections 3 and 4 of the Act, that a vehicle which is either not used on roads or use of which is discontinued for a period etc., if is seeking for exemption, an application has to be made in terms of the provisions of Section 16 of the Act and the Government has the power to grant such exemption; that in respect of the vehicle in question though the petitioner had intimated the non-user of the vehicle in terms of the earlier intimation during the year 1995 and had also intimated the place of garage where the vehicle was kept during such non-user, the exemption is not absolute but is subject to certain conditions imposed in terms of the Government Notification No.HD.95 TMT 77 [II] dated 11-9-1980; that unless a person complies with such conditions as are stipulated in this notification, the exemption does not enure to the benefit of such a person claiming such benefit, that in the present case, though initially the vehicle was parked in the garage and even as per the periodic reports of the Motor Vehicle Inspector till the year 1997 it was so parked, on inspection made by the Motor Vehicle Inspector as on 28-2-2003, the vehicle was not found in the garage and a show cause notice had been issued in this connection and in this context the petitioner having sent a reply on 12-5-2005 addressed to the Regional Transport authority and Regional Transport Officer, Udupi which is borne out of the records of the respondents, the petitioner had specifically admitted that at the time of the inspection by the motor vehicle Inspector on 28-2-2003, the vehicle was not available at the garage where he had parked the same as the garage owner had asked the petitioner to move the same from his premises and for such reason, the petitioner had sought for permission for scrapping the vehicle, but though he later learnt that the permission sought for had not been received at the office for which he was expressing regret and also had indicated that the vehicle was subsequently sought to be scrapped by canceling the registration and in terms of this letter, the version of the petitioner that the vehicle was not in existence any more cannot be accepted.
16. Though this letter is not produced as annexing to the pleadings to the petition, the copy of this letter is available on record with the respondents and copy is also produced before the court by the learned Additional Government Advocate along with the memo.
17. Learned Additional Government Advocate would therefore counter the argument that the vehicle was not in existence and therefore was not liable to tax and the decision relied upon by the learned counsel for the petitioner would not further the case of the petitioner.
18. On the other hand, learned Additional Government Advocate would place strong reliance on the Judgment of the division Bench of this court rendered in W.A. No. 2839/2003 Dtd. 20-6-2005 wherein in similar circumstances, a liability which had been arisen on a person who had surrendered the documents and had intimated the place of parking of the vehicle but had later removed the vehicle from the place, was asked to make good the liability by paying the taxes that had been quashed by the learned single Judge and the demand for payment of tax having been upheld by the division Bench in terms of this Judgment, the present case is squarely covered by the ratio of this Judgment and writ petition is to be dismissed.
19. Learned Additional Government Advocate would also place reliance on yet another division Bench decision of this court rendered in WA No. 125/1985 on 15-2-1985 and urges that the moment a person violates any of the conditions in terms of the Notification of the year 1980, the person disentitles the exemption under Section 16 of the Act and therefore the petitioner cannot claim benefit of any exemption in which event the demand raised on the petitioner for the period from 1-6-1995 is justified and therefore the writ petition has to be dismissed.
20. It is also the submission of learned Government Advocate placing reliance on this decision that if at all the petitioner wants to claim that the vehicle was not used on the road for any period, it was for the petitioner to pay the taxes first and claim refund by invoking the provisions of Section 7 of the Act and that cannot be sought to be made good even while determining the liability in terms of the provisions of the Act; that the demand raised is justified and if the petitioner so wants to claim any refund, it is for the petitioner to follow the prescribed procedure after paying the taxes.
21. Reliance is also placed on the reported decision of another division Bench of this court in the case of Jerome Crasta v. Regional Transport Officer reported in : ILR1991KAR3212 .
22. The sum and substance of these decisions is that the person claiming exemption in terms of the Notification under Section 16 of the Act can seek such exemption only by complying with the conditions also stipulated in the order granting exemption and not otherwise. One of the conditions is that the vehicle should remain in the very place where it is intimated to have been parked and if the person should remove the vehicle from that place without intimation, the person becomes disentitled for exemption.
23. A perusal of the Judgments relied upon by learned counsel for the petitioner as well as learned Additional Government Advocate and on perusal of the pleadings and the orders passed by the authorities, I find that while for claiming exemption, a person should undoubtedly comply with the conditions imposed under the Government Order granting exemption, the question will be as to in what manner a person may lose the exemption and at what point of time. In none of the decisions referred to above, this question has been specifically gone into. I find that even in the present case, the intimation of the non-user of the vehicle has been received by the respondents way back in the year 1995. That has been accepted and an order passed in terms of Section 16 read with Notification dated 11-9-1980. That means so long as the vehicle remains in position where it is intimated to have been parked the person becomes entitled for exemption. Even in terms of the reports of the Motor Vehicle Inspector, pursuant to the periodic inspection, the vehicle was found to have been parked in the very place upto 8-5-1997. For the reasons best known to the respondents, it appears no further inspection had been carried out thereafter, but the inspection was carried out with regard to the existence of the vehicle in the very place only on 28-2-2003 on which date admittedly the vehicle was not at the place where it had been intimated to have been parked. If one should go by the sequence of events, there cannot be any doubt that the petitioner continued to derive the benefit of exemption order till the last date when the vehicle was found at the place of the garage i.e., as on 8-5-1997. While this is the trend, it does not necessarily mean that the vehicle was not there immediately thereafter. If one should go by the earlier sequence, one can reasonably infer that the vehicle continued to be there unless it is found to have been removed on a particular day from the place. There is no material with the respondents to indicate that the vehicle had been moved away from that place at any point of time before 28-2-2003, the date on which physical verification was done by the Motor Vehicle Inspector. That means the vehicle could have been there till that day. This is an inference which has to be drawn in favour of the petitioner because earlier the vehicle continued to be there as had been intimated and the non-existence was found for the first time only on 28-2-2003.
24. Though considerable reliance is placed on the letter of the petitioner dated 12-5-2005, if at all it is an admission of the removal of the vehicle from the place, it does not necessarily give the date and the letter being in the year 2005 could have been any time in between.
25. Be that as it may, the stand of the petitioner is that the vehicle was not in existence and therefore there is no tax liability. If the vehicle was not in existence and therefore it was not road worthy or it had not been used on the roads, it is a matter which has to be proved by the petitioner and that stage will arise only when the petitioner can claim refund in terms of an application under Section 7 of the Act. So far as liability is concerned, it is under the charging section and so long as the vehicle has registration certificate, the liability co-exists with the vehicle. But that liability can cease if there is an exemption order by the Government in terms of Section 16 of the Act In the present case, there was such an order when the petitioner surrendered the documents and gave intimation of the non-user of the vehicle. That order will enure to the benefit of the petitioner so long as the vehicle remained at that place. On facts, there is no material or proof to indicate that the vehicle had not remained in the place at any time before 28-2-2003. If such is the tactual position, then in terms of the very exemption order, the petitioner becomes entitled for exemption upto that point of time. It is only thereafter that the petitioner loses the benefit of the exemption order in terms of the Government Notification of the year 1980 as and after that day, the vehicle was positively not at the place where it had been intimated to have been parked.
26. In this view of the matter, I am of the clear opinion that the demand raised in terms of the impugned demand by the 1st respondent and affirmed by the 2nd respondent in so far as it relates to the period prior to 28-2-2003 cannot be sustained. It will be clearly contrary to the very exemption order.
27. However, as the tax liability is for the entire period, the petitioner may be liable for the quarter in which the date 28-2-2003 falls and the demand from this quarter and upto such time when the registration certificate is cancelled in the manner known to law can be justified.
28. In the circumstances, white the demand towards tax and levy in so far as it relates to the period prior to the quarter in which the date 28-2-2003 occurs are quashed by issue of a writ of certiorari, the demand for the quarter in which the date 28-2-2003 and for the subsequent period in terms of the impugned demand and penalty is sustained, proportionately.
29. However, it is open to the petitioner, if so advised, to independently seek for refund of the amount after paying the amount if the petitioner is able to convince the authorities that the vehicle in fact was not used on roads in terms of Section 7 of the Act by filing a suitable application for the refund of taxes so paid for the subsequent period.
30. Rule made absolute. Writ petition allowed to the extent indicated above.