TaxTMI 
TaxTMI 
1987 (7) TMI 577
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....nvolved in the case. The first respondent sold his goods vehicle, to wit a 12 ton lorry bearing Registration No. MYH 3797, to the second respondent on 2.1.71 but neither of the respondents reported the transfer of the vehicle to the Regional Transport Officer in compliance with the terms of Sub-Section (1)(a) and Sub-Section (1)(b) of Section 31 of the Motor Vehicles Act. Be that as it may, it came to the notice of the Regional Transport Officer subsequently that the tax payable for the vehicle under Section 3(1) of the Mysore Motor Vehicles Taxation Act, 1957 (hereinafter the Taxation Act) for the period 1.10.72 to 31.3.74 amounting to Rs. 6,300 had not been paid. This led to a demand notice being issued to the first respondent to pay the arrears of tax together with penalty. The first respondent refuted his liability to pay the arrears of tax on the ground he had transferred the vehicle to the second respondent as early as on 2.1.Tl. A 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 had been lying in a workshop during the relevant period without repa....
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.... rejected the contention and held that the word 'kept' occurring in Section 3(1) must be construed as 'kept for use' and that in the absence of evidence to show that the vehicle had been made use of or that it had been 'kept for use', the currency of the Certificate of Registration would not by itself attract tax liability. ,For taking such a view the High Court placed reliance on an earlier decision rendered in Naraina Reddy v. Commr. of Transport, [1971] 2 Mys. Law Journal 319). The Bench also held, following the view taken in yet another earlier case B.G. Bhagwan v. Regional Transport Officer, (AIR 1967 Mysore 139) that in the absence of a fitness certificate, Section 38 of the Motor Vehicles Act would be attracted and therefore a Certificate of Registration will not have currency without a co-extensive certificate of fitness for the vehicle. Even without going into the correctness of the view taken by the High Courts, we would like to point out that the two earlier decisions do not really provide support for the view taken by the High Court. Bhagwan's case was decided on the basis of the peculiar facts therein. What had happened in that case was t....
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.... "In view of the cancellation of the fitness certificate, it follows that the Certificate of Registration issued to the petitioner was no more current. That being the position, the Explanation to Section 3(1) of the Mysore Motor Vehicles Taxation Act, 1957, is inapplicable to the facts of the present case." (Emphasis supplied) In so far as the decision in Naraina Reddy's case is concerned, the permit-holder therein had paid the tax for his stage carriage for the quarter ended 30.6.59 but failed to pay the tax for the next two quarters ending with 30.9.59 and 31.12.59. On 5.2.60 he paid the tax for the months of February and March 60 alone. The non-payment of tax for the period 1.7.59 to 5.2.60 was subsequently noticed and a demand was made on him to pay the arrears of tax for the abovesaid period together with penalty. The permit-holder contended that the demand was illegal because the vehicle was not in Use during the relevent period and he had actually kept it in a workshop at Madanapalle in Andhra Pradesh from 30.6.59 and furthermore the certificate of fitness for the vehicle had expired on 30.6.59 itself and it had been renewed only on 5.2.60 and b....
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....y for the view taken in Reddappa's case. We will now examine the scope of Section 3(1) of the Taxation Act and the effect of the Explanation to it. At the relevant time the Mysore Motor Vehicles Taxation Act 1957 (now the Karnataka Motor Vehicles Taxation Act, 1957) was in force and Section 3(1) and the Explanation read as follows:- "(1) A tax at the rates specified in Part A of the Schedule shall be levied on all motor vehicles suitable for use on roads, kept in the State of Mysore; Provided that in the case of motor vehicles kept by a dealer in or manufacturer of, such vehicles for the purposes of trade, the tax shall only be levied and paid by such dealer or manufacturer on vehicles permitted to be used on roads in the manner prescribed by rules made under the Motor Vehicles Act, 1939. Explanation.--A motor vehicle of which the certificate of registration is current shall, for the purpose of this Act, be deemed to be a vehicle suitable for use on roads." It will also be apposite to extract the relevant portion of Section 4 since Sections 3 a....
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....le for use on roads" in the said Entry have been construed by Hidayatullah, J. as he then was in Automobile Transport case as under (vide page 571):- "The words 'suitable for use on roads' describe the kinds of vehicle and not their condition. They exclude from the Entry, farm machinery aeroplanes, railways etc. which though mechanically propelled are not suitable for use on roads. The inclusion of trams using tracks which may be on roads or off them, makes the distinction still more apparent." It, therefore, follows that the same meaning should be given to those words occurring in Section 3(1) and the Explanation also. The resultant position that emerges is that Section 3(1) confers a right upon the State to levy a tax on all motor vehicles which are suitably designed for use on roads at prescribed rates without reference to the road worthy condition of the vehicle or otherwise. Section 4 enjoins every registered owner or person having possession or control of the motor vehicle to pay the tax in advance. The Explanation to Section 3(1) contains a deeming provision and its effect is that as long as the Certificate of Registration of a motor ve....
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....nt of the tax if the vehicle is not put to use on the roads and he can apply to the authorities concerned and seek appropriate refund as per the scales given in Rule 23. The scheme of the Taxation Act is such that the tax due on a motor vehicle has got to be paid in terms of Section 3 at the prescribed rate and in advance and the liability to pay tax continues as long as the Certificate of Registration is current but if it so happens that in spite of the Certificate of Registration being current, the vehicle had not actually been put to use for the whole of the period or a continuous part thereof, not being less than one calendar month, the person paying the tax should apply to the Prescribed Authority and obtain a refund of the tax for the appropriate period after satisfying the Authorities about the truth and genuineness of his claim. Sections 3 and 4 are absolute in their terms and the liability to pay the tax in advance is not dependant upon the vehicle being covered by a Certificate of Fitness or not. Even if the vehicle was not in a road worthy condition and could not be put to use on the roads without the necessary repairs being carried out, the owner or person having posses....
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....enever the person paying the tax has not made use of the roads by plying the vehicle and substantiates his claim by proper proof. Any view to the contrary would defeat the purpose and intent of the Taxation Act and would also afford scope and opportunity for some of the persons liable to pay the tax to ply the vehicle unlawfully without payment of tax and later on justify their non-payment by setting up a plea that the vehicle was in repair for a continuous period of over a month or the whole of a quarter, half-year or year as they choose to claim. In view of a legislative change in the Act we do not find any necessity to go into the question whether the words "kept in the State of Mysore" should be construed as "kept for use in the State of Mysore ". It may be remembered that this construction found favour with the Karnataka High Court in its decision in Naraina Reddy's case and Reddappa's case. The Words "kept in the State of Mysore" and the proviso to the Section have been omitted by Karnataka Act 38 of 1976 and therefore, the discussion on that point will only be of academic value now. It is for that reason we do not feel ....
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.... goods in it inspite of the vehicle not being in a fit condition and not carrying a certificate of fitness and thereby endangering the safety of the public. The deeming effect on the certificate of registration of a vehicle when it is not carrying a certificate of fitness is to ensure that the safety of the public is not jeopardised by anyone driving or using a vehicle without a certificate of fitness for carrying passengers or goods and trying to take umbrage for the violation by contending that he was entitled to make such use because of the certificate of registration issued to the vehicle being current. It has also to be noticed that Section 38 contains a safety measure while Section 3 of the Taxation Act pertains to a compensatory measure. The former cannot therefore limit the operation of the latter i.e. Section 3(1) of the Taxation Act and the explanation thereto. In the light of our discussion it follows that Section 3(1) of the Taxation Act and its Explanation have to be construed on their own force and not with reference to Section 38 of the Motor Vehicles Act. The combined effect of Sections 3, 4 and 7 of the Act is that the State is empowered to levy tax on all motor....