TaxTMI 
TaxTMI 
2019 (12) TMI 1579
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....ements, even if its name is not entered in the Certificate of Registration or not? If not, who is liable in this regard? 2. Whether the judgments rendered in the case of Lakhimpur Finvest Company Ltd. (supra), Manish Mukhriya (supra) and Shri Prakash (supra) and/or the judgments rendered in the case of Amar Nath Chaubey (supra) and Shriram Transport Finance Company Limited (supra), lay down the law correctly on the issue framed as Question No. 1?" 2. The Court had issued notice to opposite party No. 4 but inspite of service being sufficient as per Rules of the Court no one has appeared before us to argue the matter on his behalf. 3. We have heard Shri Amol Kumar, learned counsel for the petitioner and Shri Amitabh Kumar Rai, learned Additional Chief Standing Counsel for the State. Facts 4. Although, we are not required to decide any factual issues involved in the writ petition nevertheless a brief narration of relevant facts would help in understanding the issues before us. Petitioner is the Financier who had extended a loan to opposite party No. 4 for purchase of a transport vehicle. The terms of loan were reduced in writing in form of an agreement dated 26.6.....
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....on filed by the Financier out of which the instant reference has arisen for our consideration. 5. The vehicle in question is a public service vehicle as per Section 2(o) of the U.P. Motor Vehicles Taxation Act, 1997 read with Section 2(35) of the Motor Vehicles Motor Vehicles Act, 1988, therefore, it is a 'transport vehicle' within the meaning of Section 2(n) of the Act, 1997. Contention of rival parties 6. Contention of Shri Amol Kumar, learned counsel for the petitioner was that since transport vehicle in question was not registered in name of the petitioner-company and it continued to be registered in name of the borrower, therefore, he alone was responsible, and not the Company, for payment of any tax, additional tax and/or penalty. Fact that the vehicle had been possessed by the finance company on 9.12.2014 under a loan/hypothecation agreement was not relevant in this regard in view of Section 9(2) of the Act, 1997 and also in view of the fact that even as per definition of 'Owner' and 'Operator', it is the registered owner who is the 'Owner'. It was also his contention that mere taking of possession by the Financier is not relevant unl....
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....er was neither in possession nor in control of the vehicle and the fact that he was the registered owner or had a permit in his name, was irrelevant. In this regard he also relied upon definition of 'Operator' in Section 2(g) of the Act, 1997 which according to him supported his contention. He referred to provisions of Section 13 of the Act, 1997 to contend that after having taken possession of the transport vehicle, petitioner-Financier should have submitted a declaration in Form-A as per Rule 7 of the Rules, 1998 and if it failed to do so it cannot take any advantage of its lapse. In this context he also contended that if the petitioner-Financier claims that the vehicle is not in use as such no tax is required to be paid, then it had to take recourse to Section 12 of the Act, 1997. 8. With reference to Section 20 of the Act, 1997 Shri Rai contended that Section 20 of the Act, 1997 provides for recovery of tax/additional tax/penalty as arrears of land revenue. Section 20(3) of the Act, 1997 provides that 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 arrears of tax and a....
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....d on receiving information as provided under rule 18(1) of the Rules, 1998. Section 20(3) of the Act, 1997, thus, provides for raising of a demand from the 'Owner' or 'Operator, determining their liability, as the case may be, which means that the Taxation Officer while raising a demand has to fix the liability of payment of tax under the scheme of the Act, 1997 otherwise, the definition of 'Operator' or 'Owner' in the Act, 1997 as in the manner defined may have no relevancy. It was submitted that thus, while raising a demand under Section 20(3), Taxation Officer is required to fix liability of the person liable to pay the tax for the period it is due. 11. According to him Section 50 of the Act, 1988 relates to transfer of ownership of motor vehicle which does not get attracted in the present case and the relevant provision which is attracted is Section 51 relating to motor vehicles under hypothecation/lease/hire-purchase agreement. In this regard he contended that Petitioner-finance company did not take any steps in terms of Section 51(5), as such, it is not open for it to say that unless the Financier becomes the registered owner it is not liable to....
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....y Ltd. (supra), Khenyei v. New India Assurance Company Ltd. and others, 2015 (9) SCC 273 and J. Jeyasingh v. Deputy Commercial Tax Officer, 1993 Legal Eagle 837. Discussion on Question No. 1 13. U.P. Motor Vehicles Taxation Act, 1997 (hereinafter referred to as 'the Act, 1997') is a Taxing Statute which as per its long title provides for imposition of tax and additional tax in the State of Uttar Pradesh on motor vehicles engaged in transport of passengers and goods for hire. Motor vehicles to which it applies, are regulated by an enactment of Parliament known as the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act, 1988'). Rules known as Central Motor Vehicles Rules, 1989 (hereinafter referred to as 'the Rules, 1989) have been made by the Central Government, under the Act, 1988. U.P. Motor Vehicles Rules, 1998 (hereinafter referred to as 'the Rules, 1998) have also been made by the State Government under the Act, 1988. 14. Before referring to provisions of the Act, 1997, it would be fruitful to refer to relevant provisions of the Act, 1988 especially those relating to registration of motor vehicles as contained in Chapter-IV and some of th....
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....th action to be taken by the transferor and transferee consequent to transfer of ownership of a motor vehicle for recording transfer of ownership in the Certificate of Registration by the registering authority. This is required when the motor vehicle changes hands due to sale, or inheritance or purchase in public action conducted by the Government. It lays down penal consequences for non reporting of such transfer. The Rules corresponding to Section 50 are Rules 55, 56 and 57 of the Rules, 1989. Section 50 is as under: "50. Transfer of ownership.--(1) Where the ownership of any motor vehicle registered under this Chapter is transferred,-- (a) the transferor shall,-- (i) in the case of a vehicle registered within the same State, within fourteen days of the transfer, report the fact of transfer, in such form with such documents and in such manner, as may be prescribed by the Central Government to the registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee; and (ii) in the case of a vehicle registered outside the State, within forty-five days of the t....
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....y, having regard to the circumstances of the case, require the transferor or the transferee, or the other person, as the case may be, to pay, in lieu of any action that may be taken against him under Section 177 such amount not exceeding one hundred rupees as may be prescribed under sub-section (5): Provided that action under Section 177 shall be taken against the transferor or the transferee or the other person, as the case may be, where he fails to pay the said amount. (4) Where a person has paid the amount under sub-section (3), no action shall be taken against him under Section 177. (5) For the purposes of sub-section (3), a State Government may prescribe different amounts having regard to the period of delay on the part of the transferor or the transferee in reporting the fact of transfer of ownership of the motor vehicle or of the other person in making the application under sub-section (2). (6) On receipt of a report under sub-section (1), or an application under sub-section (2), the registering authority may cause the transfer of ownership to be entered in the certificate of registration. (7) A registering authority making any su....
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....by the Sale of Goods Act. Non compliance of Section 50 merely makes the transferor or transferee, as the case may be, liable to penal action under the Act, 1988 but it does not avoid liability to tax etc. nor does it make the transfer invalid or void. Section 50 (Old Section 31 of the Act, 1939) is attracted only as a consequence of such transfer of ownership of motor vehicle. 24. A separate and special provision has been made regarding motor vehicles subject to hire-purchase, lease or hypothecation agreement and transactions based thereon, in Section 51. Rules corresponding to it are Rule 60 and 61 of the Rules, 1989. Section 51 is as under: "57. Special provisions regarding motor vehicle subject to hire-purchase agreement, etc.--(1) Where an application for registration of a motor vehicle which is held under a hire-purchase, lease or hypothecation agreement (hereafter in this section referred to as the said agreement) is made, the registering authority shall make an entry in the certificate of registration regarding the existence of the said agreement. (2) Where the ownership of any motor vehicle registered under this Chapter is transferred and the transfe....
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....urther that a fresh certificate of registration issued in respect of a motor vehicle, other than a transport vehicle, shall be valid only for the remaining period for which the certificate cancelled under this sub-section would have been in force. (6) The registered owner shall, before applying to the appropriate authority, for the renewal of a permit under Section 81 or for the issue of duplicate certificate of registration under sub-section (14) of Section 41, or for the assignment of a new registration mark under Section 47, or removal of the vehicle to another State, or at the time of conversion of the vehicle from one class to another, or for issue of no objection certificate under Section 48, or for change of residence or place of business under Section 49, or for the alteration of the vehicle under Section 52, make an application to the person with whom the registered owner has entered into the said agreement, (such person being hereafter in this section referred to as the financier) for the issue of a no objection certificate (hereafter in this section referred to as the certificate). Explanation.--For the purposes of this sub-section and sub-sections (8) ....
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....entry in the certificate of registration regarding-- (a) hire-purchase, lease or hypothecation agreement of a motor vehicle, or (b) the cancellation under sub-section (3) of an entry, or (c) recording transfer of ownership of motor vehicle, or (d) any alteration in a motor vehicle, or (e) suspension or cancellation of registration of a motor vehicle, or (f) change of address, shall communicate by registered post acknowledgment due to the financier that such entry has been made. (11) A registering authority registering the new vehicle, or issuing the duplicate certificate of registration or a no objection certificate or a temporary certificate of registration, or issuing or renewing, a fitness certificate or substituting entries relating to another motor vehicle in the permit, shall intimate the financier of such transaction. (12) The registering authority where it is not the original registering authority, when making entry under sub-section (1) or sub-section (2), or cancelling the said entry under sub-section (3) or issuing the fresh certificate of registration under sub-section (5) shall communicate....
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....te' in the Certificate of Registration regarding the vehicle being the subject of such agreement on an application being filed in terms of Rule 61(1) in Form-35 which is as under: "FORM-35 [See Rule 51(1)] Notice of termination of an agreement of Hire-Purchase/Lease/Hypothecation (To be made in duplicate and in triplicate where the original Registering Authority is different, the duplicate copy and the triplicate copy with the endorsement of the Registering Authority to be returned to the Financier and Registering Authority simultaneously on making the termination entry in the Certificate of Registration and Form 24). To The Registering Authority We hereby declare that the agreement of Hire-Purchase/Lease/Hypothecation entered into between us has been terminated. We, therefore, request that the note endorsed in the Certificate of Registration of Vehicle No. ........... in respect of the said Agreement between us be cancelled. The Certificate of Registration together with the fee is enclosed. Date...............Signature of thumb impression of Registered owner Date................Signature of the Finan....
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.... To The Registering Authority................... I/We................... (financier) have taken possession of motor vehicle No. ........ make............ model............ owing to the default of the Registered owner.......... (name) ............ (full address) under the provisions of the agreement of hire-purchase/lease/hypothecation: *(1) The certificate of registration of the said vehicle is surrendered herewith. *(2) The registered owner has refused to deliver the certificate of registration to me/us. *(3) The registered owner is absconding. I/We request you to cancel the certificate and issue a fresh certificate of registration in my/our name. I/We enclose a fee of Rs................. Date................ Signature of the financier Specimen signatures of the financier: 1. ........................ 2. ....................... Copy to the original registering authority * Strike out whichever is inapplicable." Form-37 referable to Section 61(3) is as under: "FORM-37 [See Rule 61(3)] Notice to the Registered Owner of the Motor Vehicle to surrender ....
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....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;" The term 'Financier' is defined in Rule 2(d) of the Central Motor Vehicle Rules, 1989 as under: "2. Definitions.--In these rules, unless the context otherwise requires,- (a) ............................... (b) .............................. (c) ............................. (d) 'financier' means a person with whom the registered owner of a motor vehicle has entered into an agreement of hire-purchase, lease or hypothecation in respect of such vehicle and whose name is entered in the certification of registration as referred to in Form 34;" 31. This discussion of the provisions of the Act, 1988 would be relevant when we consider the liability to tax and penalty under the Act, 1997. The Act, 1997 and Rules, 1998 32. Tax on such motor vehicles which are registered under the Act, 1988, is required to be paid as per the Act, 1997. 33. Section 4 of the Act, 1997 is the taxing....
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....ied by the State Government by notification in the Gazette. (2) Save as otherwise provided by or under this Act no goods carriage other than those specified in sub-section (1-A), construction equipment vehicles, specially designed vehicles, motor cab (other than three wheeler motor cab), maxi cab and public service vehicles owned or controlled by the State Transport Undertaking, shall be used in any public place in Uttar Pradesh unless a quarterly tax at the rate applicable to 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 a motor vehicle under this sub-section instead of quarterly tax, an yearly tax at such rate as may be specified by the State Government may be payable. (2-A) Save as otherwise provided by or under this 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: Provided that in respect a motor vehicle under this sub-section instea....
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....er 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) the tax payable under sub-section (1-A) of Section 4, shall be payable in advance for one year at the time of the registration of the vehicle under the Motor Vehicles Act, 1988 and thereafter on or before the fifteenth day of the first calendar month of each year next following; (iii) the tax payable under sub-section (2) Section 4 shall be payable in advance for one quarter at the time of registration of the vehicle under the Motor Vehicles Act, 1988 and thereafter on or before the fifteenth day of the first calendar month of each quarter next following. (iv)(a) the tax payable under sub-section (2-A) of Section 4 shall be payable in advance for one year calendar month at the time of the registration of the vehicle under the Motor Vehicles Act, 1988 and thereafter on or before the fifteenth day of each calendar month next following; (b) the special tax payable under....
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.... or before the 15th day of each calendar month next following. Special tax under Section 4-A is to be paid at the time of issuance of temporary permits. 40. Section 9(2) deals with liability to pay tax, additional tax and penalty due on or before the date of transfer of a motor vehicle which is transferred by the registered owner to any other person i.e. it deals with arrears of such tax and penalty pertaining to the period prior to such transfer. It does not deal with liability to tax due after the date of such transfer. 41. This provision makes the transferee liable to arrears of tax and penalty due on or before the date of transfer of a motor vehicle deeming him to be owner of the said motor vehicle for the period relating to which such tax and penalty is due, although, he was not actually the owner of it during such period. A legal fiction has thus been created treating the transferee to be the owner for the said period. This, however, is without prejudice to the liability of transferor in this regard. 42. In cases covered by transfers referred in Section 9(2) both the transferor (registered owner) and the transferee (deemed owner) are liable to pay tax, additional tax....
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....een approved. All these decisions relate to the Old Act, 1939 and Section 31 thereof but the observations and principles expounded apply to the New Act of 1988 also, as the provision is similar to Section 51 thereof. 47. This, however, does not take away the obligation under Section 40 of the Act, 1988 upon the owner to get the Vehicle registered nor does it avoid other consequences including penal consequences which may follow under the Act, 1988 or the Act, 1997 for failure to do so. 48. What it means is that if a motor vehicle has been validly transferred, liability under Section 9(2) will get attracted irrespective of non compliance of Section 50 and Rule 55 referred above. Section 50 and Rule 55 are only a consequence of such transfer which is also evident from the language used therein. 49. Section 9(3) deals with non payment of tax or additional tax within the period specified under Section 1 of Section 9 and the liability in this regard. In such an eventuality it provides that in addition to the tax or the additional tax due, a penalty, as may be prescribed, shall be payable for which the owner and the operator, if any, shall be jointly and severally liable. The us....
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....der Section 14." Rule 7 of the Rules, 1998 as substituted by the notification dated 28.4.1999 reads as under: "7. Presentation of declaration.--(1) Every person who either on the commencement of the Act or thereafter, on becoming possessed of a motor vehicle which becomes liable to tax shall within fifteen days of such vehicle becoming so liable, complete, sign and deliver to the Taxation Officer the declaration in Form A. (2) A separate declaration shall be made in respect of every motor vehicle." 52. Rule 7 as substituted vide Notification dated 28.4.1999 requires every person who either on the commencement of the Act or thereafter, on 'becoming possessed' of a motor vehicle which becomes liable to tax, to complete, sign and deliver to the Taxation Officer the declaration in Form 'A' within 15 days of such vehicle becoming so liable. Form-A referred in Rule 7 of the Rules, 1998 is as under: "FORMA [See Rule 7] Declaration by Owner of a Motor Vehicle under Section 13 Part 1 (To be completed by the owner of the motor vehicle) I, .............residing at..............hereby apply for issue of a token u....
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....tor vehicle described therein in Rs. .......... Certified also that a sum of Rs.......... Has been paid as tax in respect of the said vehicle for the period ending ........... and that, subject to the correctness of the above declaration, tax certificate has been issued to the applicant on date........... Date............ Signature of Taxation Officer Region/Sub-region................ Part III (To be completed by the Registering Authority) Certified also that motor vehicle herein described has been registered under the Uttar Pradesh Motor Vehicles Rules, 1998 arid that a Registration Certificate valid until............. Has been issued and that the registration number of the vehicle has been entered in the Certificate of Tax. Registration number of vehicle................. Date...... Signature of Registering Authority Region/sub-region...................." 53. Thus, as per Section 13, the 'Owner' or 'Operator' of every motor vehicle is required to make a declaration in respect of it in Form A, deliver it within the prescribed time (as per Rule 7) to the Taxation Officer and pay to him Tax which he appears by s....
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....who keeps or operates a motor vehicle from the obligation imposed upon him by sub-section (1) of Section 13 and Rule 7 in respect of making a declaration in the event of no notice having been served." Form-E is as under: "Form - E [See Rule 18] Notice to Owner of a Motor Vehicle To, ........................ Address........................ Take notice that you are hereby required to fill up, sign and deliver to the undersigned the form of declaration enclosed in respect of every motor vehicle kept by you for use, and to pay the tax due on every such vehicle before the expiration of 15 days from the date of service of this notice. Failure to deliver the declaration or to pay the constitutes an offence under Section 10 of the Uttar Pradesh Motor Vehicles Taxation Act. Date..........20........ Signature of Taxation Officer" 59. Reference may also be made in this regard to Rule 9(3) of the Rules, 1998 which in the context of method of payment of tax mentions that every person who is required to make a declaration under Rule 7 or additional declaration under Rule 8 shall pay the tax due on the motor vehicle at ....
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....ined under Section 22(1) and if the tax etc. due in respect thereof is not paid within forty-eight hours of its seizure, the Transport Commissioner, apart from other action under the said Act, can cause the vehicle to be sold by public auction in the manner prescribed and sale proceeds of such vehicle shall be adjusted towards the tax etc. which is due as per Section 22(3). Section 22 is as under: "22. Detention of a motor vehicle in case of non-payment of tax.--(1) Where an officer authorized by the State Government in this behalf, has reason to believe that a motor vehicle has been or is being used by a person without payment of tax, additional tax or penalty if any, he may seize and detain the a motor vehicle and for the purpose take, or cause to be taken, such steps as may be considered, by him necessary, for the safe-custody of the motor vehicle and, in particular, require the driver of such vehicle to convey it to the nearest police station or any other place specified by him: Provided that the officer seizing the vehicle, shall, within forty-eight hours of such seizure, send a report of such seizure to the concerned Taxation Officer. (2) A motor ve....
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....n operator or only an owner or an operator, and action to be taken under Section 20(3) accordingly. This is how we understand the provision contained in Section 20(3). (Emphasis supplied by us) 67. On similar lines the corresponding Rule to Section 20(3) is Rule 18(3) wherein also the Taxation Officer is required to send a notice under Sub-section (3) of Section 20 in Form E-1 to the owner or operator, as the case may be, of the vehicle. Rule 18(3) records as under: "18. Notice to owners or operators of Motor Vehicles.--(1) ............... (2) .................. (3) The Taxation Officer, for arrears of tax or additional tax or penalty, shall send a notice under sub-section (3) of Section 20 in Form-1 to the owner or operator, as the case may be, of the vehicle. The notice shall be served in the manner prescribed under sub-rule (1)." Form E-1 is as under: "FORM E-1 Notice in case of dues on Motor Vehicles [See Rule 18(2)] 1. Name of the Registered Owner.......... 2. Full Address................................. The due tax/additional tax of vehicle No. ............ has not been paid after......... an amount o....
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....5) only the word 'owner' has been used obviously as the Act, 1997 does not envisage an 'operator' in respect of such vehicles. Again in Sub-section 7 the words 'an operator of a transport vehicles' are used. In Sub-section 8, with reference to motor vehicle, which includes a transport vehicle, the words 'operator, or, as the case may be, the owner.......' have been used and the rationale behind it has already been explained earlier in the context of discussing Section 9(3) and 20(3). Corresponding Rule 22 of the Rules, 1998 however refers to the term 'owner' only. The rule however cannot be read in conflict with the substantive provision contained in Section 12 and has to be read, understood and applied in consonance with it and not otherwise. 70. Under Section 9(3) it is the 'Owner' and the 'Operator', if any, of the motor vehicle who shall be jointly and severally liable. Likewise under Section 20(3) it is the 'Owner' or 'Operator', as the case may be, who can be proceeded for recovery of arrears of tax etc. Section 13 also refers to liability of 'Owner' or 'Operator' in this regard. Rule 7....
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....n of "owner" as contained in Section 2(30) of the 1988 Act. The High Court failed to appreciate the underlying legislative intention in including in the definition of "owner" a person in possession of a vehicle either under an agreement of lease or agreement of hypothecation or under a hire-purchase agreement to the effect that a person in control and possession of the vehicle should be construed as the "owner" and not alone the registered owner. The High Court further failed to appreciate the legislative intention that the registered owner of the vehicle should not be held liable if the vehicle was not in his possession and control." 75. Thus, the Supreme Court while considering the provision of Section 2(30) took note of the underlying legislative intention in including in the definition of 'Owner' a person in possession of a vehicle under the agreements referred therein to the effect that a person in control and possession of the vehicle should be construed as the 'Owner' and not alone the registered owner. Thus, both were to be the owners but in the facts of the said case which related to a motor accident claim the person in possession and control of the vehi....
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....9;s case (supra) is, thus, incorrect. 79. Thus, the first part of Section 2(h) applies to a scenario where there is no such agreement nor any possession under it and the second part applies where the vehicle is under such agreement and its possession is under such agreements, whether of the borrower or Financier. 80. Possession under such agreements as is referred in the second part of Section 2(h) does not mean only the possession of the 'Financier' consequent to a breach of agreement by the borrower based on the existence of a clause permitting such possession. It also covers possession of the vehicle by the borrower (registered owner) himself, if it is also under such agreement, which is possible, as, normally, such agreements are entered prior to purchase (except when they are entered subsequently as per Section 51(2) of the Act, 1988) and a reference to such agreement is made in the Sale Certificate in Form-21 referred in Rule 47(1)(a). Reference may be made in this regard to Form-21 as it indicates that it is to be issued by the Manufacturer/Dealer who delivers the vehicle to the purchaser with an endorsement thereon that the vehicle is held under an agreement o....
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....hose name is entered in the Certificate of Registration in respect of such vehicle and if such vehicle is the subject of a hire-purchase agreement then the person in possession of it under that agreement is the owner. This is based on the same analogy as referred in the context of Section 2(h). Thus, if the vehicle is under a hire-purchase agreement the person in possession of the vehicle under such agreement, who could be the borrower (registered owner) or the Financier, is the owner, otherwise it is the permit holder or authorization certificate holder and in its absence the registered owner who is the owner. 85. Although, under Section 66 of the Act, 1988 a permit is mandatory for using the vehicle as a transport vehicle, Section 2(g) covers a situation where there is no such permit, such as, in the case of illegal plying of a vehicle as a transport vehicle. Moreover, the registered owner and the permit holder may be two different persons, as such, this possibility has also been taken into account. 86. Noticeably, the third part of Section 2(g) is confined to a transport vehicle which is the subject of a hire-purchase agreement and does not extend to a transport vehicle wh....
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.... the field of contract, Tort, taxation etc. has been applied statutorily through Section 9(3) of the Act, 1997. The rationale behind such a principle is to facilitate easy realization and recovery of tax. What if, one of them (owner or operator) is an insolvent? Hence, such a provision. Reference may be made in this regard to Jowitt's Dictionary of English Law wherein the term 'Joint and Several' has been explained as under: "Joint and several. An obligation entered into by two or more persons is joint and several when each is liable severally and all are liable jointly. A liability may be imposed, whether by statute, contract or otherwise, on two or more persons jointly and severally; in which case, again, each is liable severally and all are liable jointly. For judicial and statutory constructions and definitions in different contexts see Stroud's Judicial Dictionary." Same term has been explained in Black Law Dictionary as under: "joint and several, (Of liability, responsibility, etc.) apportionable at an adversary's discretion either among two or more parties or to only one or a few select members of the group; together and in separat....
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....uch information is given by the concerned person, may be after issuance of notice to the registered owner or is otherwise received, the Taxation Officer would come to know about the aforesaid facts and would be at liberty to proceed against either the registered owner or the one in possession of the transport vehicle under an agreement of hire-purchase/lease/hypothecation, as per his choice, especially as, the contents of Form E-1 will not supersede or override the substantive provision contained in Section 9(3) and 20(3) nor the provision of Rule 18(3). 95. As regards contention of Shri Amitabh Kumar Rai, learned Additional Chief Standing Counsel for the State in this regard that the Taxation Officer can determine their proportionate liability, well, if both the parties are available and there is material which enables him to do so, he can do it, especially where indisputably the liability is of arrears of tax and/or penalty for the period prior to the date of possession of the vehicle by the Financier, when the vehicle was in possession of the registered owner, as, there is no bar in the Act, 1997 in this regard. However, in the event he is unable to do so, he has the option t....
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....n respect of a 'transport vehicle' also, the Financier on taking possession of such a vehicle under a hire-purchase, lease or hypothecation agreement, becomes its 'Owner', and also its 'Operator' if the agreement is of hire-purchase. Even if it is not a hire-purchase agreement, and the Financier does not becomes its operator from the date of such possession, it is still its owner under Section 2(h) who is in possession under the other two types of agreement, and, thus, would be liable alongwith the permit holder/authorization certificate holder or the registered owner, as the case may be, who, in this case, would be the 'Operator', jointly and severally, in terms of Section 9(3), as discussed earlier. Their liability would be in keeping with the concept of joint and several liability as elucidated in the earlier part of this judgment. 103. The fact that the Financier's name is not yet entered in the Certificate of Registration would be of no consonance as it is not a prerequisite for being the 'Owner' or 'Operator' in such a scenario under Section 2(h) and 2(g). In fact 'Ownership' and 'Operatorship' based on po....
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....t produced before it, cancel the Certificate and issue a fresh Certificate of Registration in the name of the person with whom the registered owner had entered into such agreement, but, if the Financier does not take recourse to Section 51(5) then he cannot take advantage of his lapse, especially in view of Section 2(g), 2(h), 9(3), 20(3) and Section 13 of the Act, 1997 read with Rule 7, 9(3) and 18 of the Rules, 1998 as discussed hereinabove. As stated earlier Form-A referred in Section 13 read with Rule 7 is also indicative of the requirement of the Financier, in such a situation, to get its name entered in the Certificate of Registration in respect of the vehicle in question and submit a declaration in Form-A. This is also the requirement under the Act, 1988. 107. Section 51(5), it appears, applies, even in cases where, on possession being taken by the Financier, as aforesaid, Certificate of Registration is handed over by the registered owner to it, as is evident from the contents of Form-36, as already quoted, which is referred in Rule 61(2) of the Rules, 1989 read with Section 51(5) of the Act, 1988. Liability to pay arrears of tax, additional tax and penalty from the da....
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....aration in this regard in Form-A under Section 13 read with Rule 7, he was liable to pay such tax etc., therefore, recovery of such arrears should primarily and firstly be made from him. The Taxation Officer should proceed to recover such arrears from such registered owner or permit holder or authorization certificate holder, who was primarily liable in this regard. Only when it is not possible to recover it from such a person, may be on account of the fact that he is absconding or is untraceable or his whereabouts are not known or he has become insolvent or there are similar other reasons jeopardizing the interest of revenue, Taxation Officer can proceed to recover such arrears from the Financier who has taken possession of the vehicle, in respect of which such arrears are due. 113. It could be asked why should the Financier be made liable for recovery of arrears of tax and penalty for a period prior to such possession merely because he had taken possession of the vehicle on account of breach of agreement, that too, subsequently? Would it not be unfair and equitable? Would it not put a premium on default by the registered owner (borrower), by making the Financier unfairly liabl....
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....as been considered herein is tax liability. Liability under Section 9(2) 116. Although we are of the view that a transaction such as the one under the agreements referred above attracts the definition of owner and operator under Section 2(g) and 2(h) and not the concept of 'deemed ownership' under Section 9(2) and consequently it attracts the liability under Section 9(3) and 20(3) and not Section 9(2) as it is not a voluntary act of transfer of ownership by the registered owner, assuming that it is covered under the term 'transfer' under Section 9(2), the financier, as transferee/deemed owner, would still be liable to pay tax etc. due on or before the date of such transfer i.e. arrears of tax as already discussed. The rationale behind the provision has already been mentioned. Here again this would be without prejudice to liability of the transferor in this regard. Thus the taxation officer can proceed against both of them on almost the same analogy as discussed in the context of Section 9(3). 117. The distinction if any between Section 9(2) and 9(3) in this regard is on account of existence of a deeming clause in Section 9(2) and the transfer referred there....
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....joint and several liability under Section 9(3), which we have considered, have not been considered, therefore, in so far as the said decisions are not in consonance with our judgment and are in conflict with it, they do not lay down the law correctly. 121. As regards decision of this Court in the case of Daya Shanker Yadav (supra), it does not decide any of the issues referred to us. It only considers the requirement of issuance of notice prior to recovery of tax, therefore, the said decision is not relevant to the questions which we have considered. 122. As regards decision in the case of Shri Prakash (supra) the petition in the said case was dismissed only on the failure of the petitioner to show to the Court the relevant provision under which a registered owner ceased to be liable to tax because possession of the vehicle had been taken over by the Financier. The decision does not consider relevant provisions of the Act and the Rules nor the law on the subject, as has been done by us, therefore, it does not contain any 'ratio decidendi' which may constitute a binding precedent on the subject nor is it relevant in the context of the questions under consideration. ....
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....fting the liability of payment of tax from the registered owner to any other person. No doubt, the view expressed by the Division Bench has practical relevance but in a taxing statute we are required to consider the liability to pay tax, additional tax, penalty etc. in the light of the provisions contained therein construing the statutory provisions strictly. While it is true that in the event a Financier takes possession of the vehicle but does not get a fresh Certificate of Registration issued in his name in terms of Section 51(5), then, the Taxation Officer would not be able to know of the said transaction so as to impose and enforce liability to tax upon the Financier but then in such an eventuality he would make the registered owner liable as per the Act, 1997 and the Rules, 1998 as already discussed in the context of question No. 1 whereupon, the registered owner would obviously come forward and inform him about the transaction, unless he disputes it. In the latter case he would be liable and in the former, the Taxation Officer, on getting knowledge of the possession by the Financier, will issue notice to him under Rule 18 of the Rules, 1998 for the tax payable from the date ....