TaxTMI 
TaxTMI 
2022 (2) TMI 1006
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.... 2. As above stated, that the appellant - Mahindra and Mahindra Financial Services Limited, is a financier, who had extended a loan for purchase of a transport vehicle. On default in payment of loan, it had taken the possession of the vehicle in question. The dispute is liability to pay tax under the U.P. Motor Vehicles Taxation Act, 1997 (hereinafter referred to as the "Act, 1997") on such financier-in-possession of the vehicle. Before the High Court, the following question was referred to the Full Bench:- "1. Whether in view of Sections 2(g), 2(h), 4, 9, 10, 12, 13, 14 and 20 of the Act, 1997 read with Sections 39, 50 and 51 of the Act, 1988 and other relevant provisions of the said enactments and the Rules of 1998 and 1989, a Financier of a motor vehicle/ transport vehicle in respect of which a hire-purchase, lease or hypothecation agreement has been entered, is liable to tax from the date of taking possession of the said vehicle under the said agreements, even if, its name is not entered in the Certificate of Registration or not? If not, who is liable in this regard? 2.1 By the impugned judgment and order, the High Court has held against the appellant - financier and has he....
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....It is urged therefore that the most important factor is operation/running of a vehicle as a precondition for imposition of tax. It is submitted that the aforesaid condition becomes absolutely essential for the purpose of Section 12, which provides that even in case the tax is paid in advance for running of vehicle for a particular period and the same is not actually run for that period then the refund may be sought and granted in appropriate case. It is submitted that even for the purpose of refund also, as the financier, who will not be in possession of a token or permit or the registration certificate will not be in a position to even pray for refund. 4.4 It is vehemently submitted by learned counsel appearing on behalf of the appellant that as the original certificate of registration and the permit would be with the registered owner, the appellant-financier cannot use the transport vehicle in the absence of having any permit and/or certificate of registration. Therefore, there cannot be any liability on the financier to pay the tax imposed under the Act, 1997. 4.5 Making the above submissions and relying upon a decision of this Court in the case of State of Maharashtra and Ors....
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....a Prasad, learned Senior Advocate appearing on behalf of the respondent - State of U.P. that Section 4 of the Act, 1997 is the charging section. That as per Section 4 (2-A) save as otherwise provided by or under the Act no public service vehicle other than those referred in sub-section (1-A) and sub-section (2) shall be USED in any public place in Uttar Pradesh unless a monthly tax at such rate as may be notified by the State Government is paid in respect thereof. As per the proviso, instead of monthly tax, a quarterly or a yearly tax may be payable at such rate as may be notified by the State Government. It is submitted that as per Section 9(1)(iv)(a) the tax payable under sub-section (2-A) of Section 4 shall be payable in advance for one calendar month at the time of registration of the vehicle under the Act, 1988 and thereafter on or before the fifteenth day of each calendar month next following. It is submitted that such a tax is required to be paid in advance and hence the liability to pay the tax is first and then only can the vehicle be used. Therefore, the financier-inpossession of the transport vehicle being an "owner", as defined under the Act, 1997, is liable to first pa....
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.... taking possession of the said vehicle under the said agreements. 8. While deciding the present issue, the relevant provisions of the U.P. Motor Vehicles Taxation Act, 1997 are required to be referred to and considered. They are Sections 2(h), 4, 9, 10, 12 and 20, which read as under:- "2(h) "owner" in respect of a motor vehicle means the person whose name is entered in the certificate of registration issued in respect of such vehicle, and where such vehicle is the subject of an agreement of hire purchase or lease or hypothecation, the person in possession of the vehicle under that agreement and where any such person is a minor, the guardian of such minor; 4. Imposition of tax.- (1) Save as otherwise provided in this Act or the rules made thereunder, no motor vehicle other than a transport vehicle, shall be used in any public place in Uttar Pradesh unless a one-time tax at the rate applicable in respect of such motor vehicle, as may be specified by the State Government by Notification in the Gazette has been paid in respect thereof: Provided that in respect of an old motor vehicle instead of a one time tax, annual tax applicable to such motor vehicle as may be specified by....
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....goods carried by road is entered into between the Government of Uttar Pradesh and any other State Government or a Union Territory, the levy of tax under sub-section (1-A) or sub-section (2) shall, notwithstanding anything contained in the said sub-section, be in accordance with the terms and conditions of such agreement: Provided that the tax so levied shall not exceed the tax which would otherwise been levied under the Act. (3) Where any motor vehicle other than a transport vehicle is found plying as a transport vehicle, such tax therefore as may be notified by the State Government, shall be payable. (4) The State Government may, by notification, increase by not more than fifty percent, the rates of tax, specified in Part 'B', Part 'C' or Part 'D' of the First Schedule. 9. Payment of tax and penalty-(1) Subject to the provisions of Section 11- (i) the tax payable under sub-section (1) of section 4 shall be paid at the time of the registration of the vehicle under the Motor Vehicles Act, 1988: Provided that in respect of an old motor vehicle, the tax shall be payable in advance on or before the fifteenth day of January in each year; (ii)....
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....hout payment of tax- (1) Notwithstanding anything contained in Section 9, no transport Vehicle shall ply in Uttar Pradesh- (a) under a temporary permit granted under the Motor vehicles Act, 1988 by an authority having jurisdiction outside Uttar Pradesh unless there has been paid in respect thereof a tax under Section 4 for its use or stay in Uttar Pradesh. (b) under a national permit granted under subsection (12) of Section 88 of the said Act by an authority having jurisdiction outside Uttar Pradesh unless there has been paid in respect thereof a tax under Section 4 calculated at the rate specified by the State Government by Notification in the Gazette in the manner prescribed. (c) under a permit granted under sub-section (9) of Section 88 of the said Act read with the Motor Vehicles (An India Permit for Tourist Transport Operators) Rules, 1993 by an authority having jurisdiction outside Uttar Pradesh unless there has been paid in respect thereof a tax under Section 4 at the rate specified by the State government by notification in the Gazette in the manner prescribed: Provided that the State Government may, by notification, increase by not more than fifty per cent, the....
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....month or more he shall, before the date the tax or additional tax, as the case may be, is due, surrender the certificate of registration, the token, if any, issued in respect of the motor vehicle and the permit, if any, to the Taxation Officer of the region where the tax or additional tax was last paid and on such surrender, no tax or additional tax under this Act shall be payable in respect of such vehicle for each complete calendar month of the period during which the vehicle remains withdrawn from use and the aforesaid documents remain surrendered with the Taxation Officer: Provided that in case such vehicle is found plying during the period when its documents as mentioned in this sub-section remain surrendered with the Taxation Officer, such owner or operator, as the case may be, shall be liable to the tax and the additional tax as if the documents were not surrendered and shall also be liable to the penalty equivalent to five times of the tax and additional tax. (3) Where the owner of a motor vehicle in respect whereof one-time tax has been paid under this Act proves to the satisfaction of the Taxation Officer in prescribed manner that such motor vehicle has not been use....
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....ion (1); and the amount of. such refund shall be calculated on the same principle as is laid down in the said sub-section. (8) Where the operator, or as the case may be, the owner of a motor vehicle is unable to use his motor vehicle due to an accident of the said vehicle and the certificate of registration, the token, if any, issued in respect of the said vehicle and the permit, if any are surrendered to the Taxation Officer within a week from the date of such accident together with a copy of the first information report, such surrender shall be deemed to have been made on the date of the accident. 20. Recovery of tax-(1) Arrears of any tax or additional tax or penalty payable under this Act shall be recoverable as arrears of land revenue. (2) The tax, the additional tax and penalty payable under this Act shall be first charge on the motor vehicle including its accessories, in respect whereof it is due. (3) The Taxation Officer shall raise a demand in the form as may be prescribed, from the owner or operator, as the case may be, for the arrears of tax and additional tax and penalty of each year, which shall also include the arrears of tax, additional tax or penalty, if....
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....tered into the said agreement. (5) Where the person whose name has been specified in the certificate of registration as the person with whom the registered owner has entered into the said agreement, satisfies the registering authority that he has taken possession of the vehicle from the registered owner owing to the default of the registered owner under the provisions of the said agreement and that the registered owner refuses to deliver the certificate of registration or has absconded, such authority may, after giving the registered owner an opportunity to make such representation as he may wish to make (by sending to him a notice by registered post acknowledgement due at his address entered in the certificate of registration) and notwithstanding that the certificate of registration is not produced before it, cancel the certificate and issue a fresh certificate of registration in the name of the person with whom the registered owner has entered into the said agreement: Provided that a fresh certificate of registration shall not be issued in respect of a motor vehicle, unless such person pays the prescribed fee: Provided further that a fresh certificate of registration iss....
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....h period for which such tax has been paid. However, Section 12(2) provides that where the operator or, as the case may be, the owner of a motor vehicle, does not intend to use his vehicle for a period of one month or more he shall, before the date the tax or additional tax, as the case may be is due, surrender the certificate of registration, the token, if any, issued in respect of the motor vehicle and the permit, if any, to the Taxation Officer of the region where the tax or additional tax was last paid and on such surrender, no tax or additional tax under Act, 1997 shall be payable in respect of such vehicle for each complete calendar month of the period during which the vehicle remains withdrawn from use and the aforesaid documents remain surrendered with the Taxation Officer. As per proviso to sub-section (2) of Section 12 in case such vehicle is found plying during the period when its documents as mentioned in sub-section (2) of Section 12 remain surrendered with the Taxation Officer, such owner or operator, as the case may be, shall be liable to tax and additional tax as if the documents were not surrendered and shall also be liable to penalty equivalent to five times of the....
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....ort vehicle has not been used for a continuous period of one month or more since the tax was last paid. 10.1 There is only one eventuality where no tax or advance tax under the Act, 1997 shall be payable namely under sub-section (2) of Section 12, where the operator or, as the case may be, the owner of a motor vehicle, does not intend to use his vehicle for a period of one month or more, he shall, before the date the tax or additional tax, as the case may be, is due, surrender the certificate of registration, the token, if any, issued in respect of the motor vehicle and the permit, if any, to the Taxation Officer of the region where the tax or additional tax was last paid and only on such surrender, no tax or additional tax under Act, 1997 shall be payable in respect of such vehicle for each completed calendar month of the period during which the vehicle remains withdrawn from use and the aforesaid documents remain surrendered with the Taxation Officer. 11. The submission on behalf of the petitioner is that many a time, the documents referred to in sub-section (2) of Section 12 are not with the financier/owner and they remain with the registered owner and therefore such a financi....