Allahabad High Court
Bali Giri vs State Of U.P. And 3 Others on 2 February, 2023
Bench: Rajesh Bindal, Chief Justice, Om Prakash Tripathi
HIGH COURT OF JUDICATURE AT ALLAHABAD
Chief Justice's Court Serial No. 12 HIGH COURT OF JUDICATURE AT ALLAHABAD *** WRIT TAX No. - 1396 of 2022 Bali Giri .....Petitioner Through :- Km. Preeti, Advocate v/s State of U.P. and others .....Respondents Through :- Mr. A.K. Roy, Additional Chief Standing Counsel for respondent nos. 1 to 3 Mr. Ramesh Kumar Shukla, Advocate for respondent no. 4 CORAM : HON'BLE RAJESH BINDAL, CHIEF JUSTICE HON'BLE OM PRAKASH TRIPATHI, JUDGE ORDER 1. Recovery citation dated July 6, 2022 issued against the petitioner, on account of motor vehicle tax, is under challenge in the present petition. 2. The argument raised by the learned counsel for the petitioner is that the petitioner had purchased a Tata Magic Eight Seater vehicle bearing registration No.UP 13T 6663 on December 29, 2012. The petitioner borrowed loan of ?3,47,000/- from TATA Motors Finance Limited (respondent no. 4) on February 7, 2013. The same was hypothecated with TATA Motors Finance Limited. The petitioner regularly paid nine installments of the loan. Thereafter, due to loss in travelling business, he failed to pay further installments. As a result, the possession of the vehicle was taken over by the Finance Company on January 31, 2016, which is evident from communication dated February 2, 2016 sent by the Finance Company to the petitioner. Thereafter, the vehicle was sold by the Finance Company to some other person. After possession of the vehicle was taken by the financer, the liability of the tax cannot be put on the petitioner as in that case the financer or the subsequent purchaser will be liable to pay the tax. In support of the argument reliance has been placed upon judgment of Hon'ble the Supreme Court in Mahindra and Mahindra Financial Services Ltd. vs. State of U.P. and others, (2022) 5 SCC 525. 3. Learned counsel for the State submitted that in terms of Rule 18 of the U.P. Motor Vehicles Taxation Rules, 1998 (hereinafter referred to as 'the Rules'), the petitioner was required to inform the Taxation Officer about the fact that the possession of the vehicle in question was taken by the financer, so as to enable the authority to fasten liability on the financer. As the petitioner has failed to do so, demand was raised against him. However, in case, he points out the details to the Taxation Officer, the issue will be examined in the light of judgment of Hon'ble the Supreme Court in Mahindra and Mahindra Financial Services' case (supra). 4. After hearing the learned counsel for the parties, we find merit in the submission made by learned counsel for the petitioner as he stated that possession of the vehicles in question was taken by the financer in January 2016 and in view of the judgment of Hon'ble the Supreme Court in Mahindra and Mahindra Financial Services' case (supra), the liability for payment of tax thereafter cannot be fastened on the petitioner. Relevant paragraph 12 of the aforesaid judgment is reproduced hereinbelow: "In view of the above discussion and for the reasons stated above, it is held that a financier of a motor vehicle/transport vehicle in respect of which a hire-purchase or lease or hypothecation agreement has been entered, is liable to tax from the date of taking possession of the said vehicle under the said agreement. If, after the payment of tax, the vehicle is not used for a month or more, then such an owner may apply for refund under Section 12 of the Act, 1997 and has to comply with all the requirements for seeking the refund as mentioned in Section 12, and on fulfilling and/or complying with all the conditions mentioned in Section 12(1), he may get the refund to the extent provided in sub-section(1) of Section 12, as even under Section 12(1), the owner/operator shall not be entitled to the full refund but shall be entitled to the refund of an amount equal to one-third of the rate of quarterly tax or one twelfth of the yearly tax, as the case may be, payable in respect of such vehicle for each thirty days of such period for which such tax has been paid. However, only in a case, which falls under sub-section(2) of Section 12 and subject to surrender of the necessary documents as mentioned in sub-section(2) of Section 12, the liability to pay the tax shall not arise, otherwise the liability to pay the tax by such owner/operator shall continue." (emphasis supplied) 5. In view of aforesaid, the petitioner may file objection against the recovery citation dated July 6, 2022 in terms of Rule 18 of the Rules, mentioning that possession of the vehicle in question was taken by the financer in January 2016. In case, the petitioner files objection, the same be considered by the competent authority and from the date of possession of the vehicle was taken by the financer, the liability may be re-worked out in terms of judgment of Hon'ble the Supreme Court in Mahindra and Mahindra Financial Services' case (supra). However, for any period prior to that, if the tax has not been paid, the petitioner shall be liable to pay the same. 6. The writ petition is, accordingly, disposed of and recovery citation dated July 6, 2022 issued against the petitioner is quashed. (Om Prakash Tripathi) Judge (Rajesh Bindal) Chief Justice Allahabad 02.02.2023 Manish Himwan Whether the order is speaking : Yes Whether the order is reportable : Yes/No
