New State Academy Senior ... vs The Lieutenant Governor, N.C.T. ...
2004 Latest Caselaw 631 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner school purchased a school bus No. DL-IV-0996 from Bosco Public School in the year 1996. A certificate of registration dated 5.7.1996 was issued in favor of the petitioner school accepting the transfer with a transfer date given as 24.6.1996. Against the column in respect of payment of road tax, it was endorsed 'Tax Exmpt'.

2. In terms of the requirement of running such a bus, fitness certificate was obtained year-to-year by the petitioner. The last such relevant certificate is dated 18.10.1999, which was valid till 17.10.2000. This certificate was also endorsed with tax exemption.

3. In October, 1999, a meeting is stated to have been held between the representatives of the petitioner and the respondents as part of the process of such discussion with various schools by the respondents. This arose on account of the fact that it was brought to notice of the petitioner that from that year onwards exemption would be required annually from payment of tax before the commencement of a new financial year. The petitioner was asked to apply for a fresh exemption certificate for the year 2000-2001. The petitioner received a letter dated 5.11.1999 from the respondent in respect of the request of issuance of the road tax exemption certification stating that in terms of Rule 11 of the Delhi Motor Vehicles Taxation Rules, 1963 (hereinafter to be referred to as 'the Taxation Rules') framed under The Delhi Motor Vehicles Taxation Act, 1962 (hereinafter to be referred to as, 'the Taxation Act'), the exemption could be given by the Department legally only for the-current year. There were certain communications exchanged between the parties thereafter since the claim of the petitioner was that the bus in question was shown as exempt from tax both at the stage of registration of the transfer in favor of the petitioner as also in terms of the fitness certificates issued from time-to-time. However, the petitioner received a notice dated 29.8.2000 asking the petitioner to show the proof of payment of tax or pay the tax and arrears for the period from 1.5.1992 to date within a week of the receipt of notice. The petitioner responded by stating that the bus was being regularly sent to the Inspection Unit and the fitness certificate was being issued with the endorsement of 'Tax Exempt'. Despite various representations by the petitioner to different authorities, there was no positive response.

4. The petitioner thereafter filed the present writ petition seeking quashing of the communications declining the request of the petitioner and for directions to the respondents to treat the school bus as exempt from payment of road tax under Section 13 of the Taxation Act.

5. The stand of the respondents in their counter affidavit is that the petitioner was required to apply for exemption from year to year which the petitioner had failed to do. The matter specially came to notice of the respondents when directions were passed by the Supreme Court of India in a public interest litigation being Civil Writ Petition No. 13029/1985 titled as 'M.C. Mehta v. Union of India and Ors.' where the issue of pollution caused by the vehicles have been raised. During the proceedings, it was found that there was a huge difference between the registration number of the vehicles and the vehicles paying the tax and, thus, directions were passed by the Supreme Court on 22.9,1998 to the effect that no commercial/transport vehicle shall ply without payment of motor vehicle tax. It was in pursuance to these directions that the matter was taken up in October, 1998 and on verification, it was found that there ere number of vehicles where tax had not been paid. It is stated that the vehicle owner had to apply in Form VI in pursuance to the provisions contained in Rule 11 of the Taxation Rules along with the certificate of registration and valid insurance policy claiming exemption from payment of motor vehicle tax. On satisfaction, the taxation authorities would exempt the vehicle from tax and validity of the exemption expires on the last day of the calendar year.

6. In the particular case in question, it is stated that the original registration of the vehicle on 1.5.1992 in favor of Bosco Public School shows that the tax had been paid only up to 30.6.1992 and no exemption had been applied for. It was, thus, submitted that even for the period prior to the purchase of vehicle, the petitioner is liable to pay the tax.

7. A further plea has also been raised about the availability of an alternative remedy to file an appeal against the order of the taxation authorities under Section 16 of the Taxation Act read with Rule 12 of the Taxation Rules.

8. Learned Counsel for the petitioner has emphasized the fact that there is no dispute about the existence of a notification for exemption from payment of such tax in respect of school buses under Section 13(3) of the Taxation Act. In order to appreciate this plea, it is necessary to refer to the notification in question dated 20.7.1963, the relevant extract of which is as under:

DELHI ADMINISTRATION, DELHI NOTIFICATION

DATED the 20 July, 1963

No. F 21(5)A/63-PR(T): The Chief Commissioner, Delhi being of opinion that it is necessary or expedient in the public interest so to do, is pleased, in exercise of the powers conferred by Sub-section (3) of Section 13 of the Delhi Motor Vehicles Taxation Act, 1962, to exempt with effect from 1st April, 1963, the motor vehicles of the following classes or belonging to the following classes of persons, from the payment of the tax levied under the said Act to the extent, if any, specified against them.

Class of Motor Vehicles-

... ... ...

2. Motor vehicles owned by recognized educational institutions and by such other educational institutions as may be specified in this behalf by the Director of Education, Delhi Administration situated in the Union Territory of Delhi and kept for the exclusive use of conveying pupils of the institutions.

9. The relevant provision of the Taxation Act under which the aforesaid notification dated 20.7.1963 has been issued is as under:

13(3). Where the Administrator is of opinion that it is necessary or expedient in the public interest so to do, he may, by notification, in the Official Gazette, and subject to such conditions as he may specify in the notification, exempt either totally or partially any class of motor vehicles other than those falling under Sub-section (1) or any motor vehicles belonging to any class of persons from the payment of the tax.

10. Learned Counsel for the petitioner submitted that the aforesaid Subsection clearly stipulated that the notification for exemption could be issued and would be subject to such conditions as may be specified in the notification. The notification itself did not provide for any yearly certificate to be obtained and, thus, the notification forms a part of the Taxation Act itself. In this behalf, reference was made to judgment of the Supreme Court in Video Electronics Pvt. Ltd. and Anr. v. State of Punjab and Anr. where it has been held that a notification having been made in accordance with the powers conferred by the statute has statutory force and validity and, therefore, exemption is as if contained in the Taxation Act itself.

11. Learned Counsel further contended that Section 56 of the Motor Vehicles Act, 1988 (hereinafter to be referred to as, 'the said Act') provides for a certificate of fitness of a transport vehicle. The relevant provision is as under:

56. Certificate of fitness of transport vehicles-

(1) Subject to the provisions of Sections 59 and 60, a transport vehicle shall not be deemed to be validly registered for the purposes of Section 39, unless it carries a certificate of fitness in such form containing such particulars and information as may be prescribed by the Central Government, issued by the prescribed authority, or by an uthorized testing station mentioned in Sub-section (2), to the effect that the vehicle complies for the time being with all the requirements of this Act and the rules made there under:

Provided that where the prescribed authority or the 'authorised testing station' refuses to issue such certificate, it shall supply the owner of the vehicle with its reasons in writing for such refusal.

12. The Central Motor Vehicles Rules, 1989 (hereinafter to be referred to as 'the said Rules') have been enacted in pursuance-to the power conferred under the said Act and Rule 73 thereof is as under:

73. Tax clearance certificate to be submitted to the testing station-

No authorised testing station shall accept an application for the grant or renewal of a certificate of fitness unless the same is accompanied by a tax clearance certificate in such form as may be specified by the State Government, from the Regional Transport Officer or Motor Vehicles Inspector having jurisdiction in the area to the effect that the vehicle is not in arrears of motor vehicle tax or any compounding fee referred to in Sub-sections (5) and (6) of Section 86.

13. A reading of Rule 73 of the said Rules shows that a certificate of fitness cannot be issued unless the same is accompanied by the tax clearance certificate. It was, thus, submitted that the respondent authorities also clearly understood the notification as if once the exemption had been granted, the same would remain valid since the certificate of fitness was issued year to year to the petitioner with the endorsement 'Tax Exempt'. It was, thus, submitted that the respondents never required the petitioner to comply with Rule 11 of the Taxation Rules as the same could have always been done by the petitioner as it was a mere formality. This is based on the plea that it is not disputed that the petitioner's vehicle was being used only for the purpose for which exemption was permitted and the exemption notification continues to be in existence. Rule 11 of the Taxation Rules is as under:

11. Vehicles exempted from tax under Section 13-

(1) A registered owner, or a person who has possession or control of a motor vehicle used or kept for use in Delhi claiming exemption from payment of tax under Section 13, shall make an application in Form VI within 14 days of the expiry of the token, if any, last issued in respect of the vehicle.

(2) The application claiming exemption shall be signed by the applicant and delivered either personally or by an agent or by post to the Taxation Authority and shall be accompanied by the certificate of registration and a valid certificate of insurance in respect of the vehicle.

(3) If the Taxation Authority is satisfied that the vehicle is exempted from payment of tax, it shall issue a token with-

(1) the word "exempted".

(2) the vehicle number and the period for which it is valid, written oil it.

(3) The validity of the token for the exempted vehicles shall not extend beyond the last day of the current year.

14. The petitioner was asked to pay the amounts from the year 1992 towards tax and penalty both amounting to Rs. 63,257/-. In order to get the bus released, this amount has been paid during pendency of the petition. In terms of the Order dated 19.3.2001, it was directed that the deposit made by the petitioner is without prejudice to its rights and contentions and if the writ petition is allowed, the petitioner shall also be entitled to interest.

15. Learned Counsel for the petitioner submitted that there is, in fact, a complete misinterpretation of the Orders passed by the Supreme Court as the scope and ambit of consideration of the matter before the Supreme Court was quite different. The issue was of pollution and the conversion to a different form of fuel. The directions passed on 22.9.1998 inter alia provided as under:

Apart from the commercial/transport vehicles which are registered, as noticed above, we are informed that there are vehicles which are either not registered or on which road tax has not been paid in National Capital Territory of Delhi. We direct that all such commercial/transport vehicles which are being plied without payment of road tax or registration, shall not be allowed to ply in the National Capital Territory forthwith and in any event not with effect from 2nd October, 1998.

16. Thereafter an application was filed before the Supreme Court by the parties owning school buses for necessary directions, The following clarification was made by the Supreme Court on 24.4.2000:

While we do not agree that the directions given by us on 28th July, 1998 require to be diluted, relaxed or modified in any way whatsoever, we find force in the submission of learned Counsel for the schools that the buses owned by the schools may not strictly speaking be treated as "commercial vehicles" to which direction T' (supra) applies. Section 2(11) of the Motor Vehicles Act, 1988 defines educational institution buses to mean:

(11) "educational institution bus' means an omnibus, which is owned by a college, school or other educational institution and used solely for the purpose of transporting students or staff of the educational institution in connection with any of its activities.

This definition does carve out a special category in favor of the buses, etc. owned by educational institutions.

We, therefore, clarify that the buses which are owned by college, school or other educational institution be treated as private buses for the purposes of the directions given by this Court on 28th July, 1998, and therefore, direction 'G' and not direction 'F' (supra) shall apply to all such buses, etc. All such buses shall, therefore, be required to be steadily converted to single fuel mode on CNG on or before 31st March, 2001.

17. Learned Counsel for the petitioner lastly submitted that it is not even clear as to under which provision the penalty has been imposed, but it appears to have been done under Section 11 of the Taxation Act, which is as under:

11. When any registered owner or any person who has possession or control of any motor vehicle used or kept for use in Delhi is in default in making a payment of the tax the taxation authority may direct that, in addition to the amount of arrears, a sum not exceeding the annual tax payable in respect of such vehicle shall be recovered from him by way of penalty:

Provided that before giving any such direction the registered owner or such person shall be given a reasonable opportunity of being heard.

It was submitted that this seems to be so since the penalty imposed is equivalent to the annual tax payable. It is, however, submitted that before such a penalty could have been imposed, a reasonable opportunity of hearing was required to be given while, in fact, no such hearing was given.

18. Learned Counsel for the respondents, on the other hand, emphasized the fact that what was being done by the respondents was within the parameters and directions of the Supreme Court and apparently the mistake occurred due to computer problems and, in fact, a submission was made that possibly the left hand was not knowing what the right hand was doing with the result that no one in the respondent department looked into the issue of the petitioner not applying in Form VI. In fact, this was a problem, which was omnipotent, since almost all the schools were in similar situation. Learned Counsel, however, submitted that most of the schools had paid the amount and penalty without any challenge.

19. Learned Counsel submitted that the mandate is contained in the Taxation Rules themselves since Form VI has to be filed in terms of Rule 11 thereof and, thus, there cannot be any violation of the statutory rules. It was further submitted that conduct of the respondents in not asking for the same cannot be of any assistance to the petitioner.

20. Learned Counsel also referred to the certificate of registration issued in favor of Bosco Public School, which contained an endorsement that the tax has been paid up to 30.6.1992.

21. I have considered the submissions advanced by learned Counsel for the parties.

22. There can be no doubt that an exemption notification can be issued by the competent authority under Section 13(3) of the Taxation Act. The notification dated 20.7.1963 was accordingly so issued granting exemptions to various vehicles including vehicles owned by recognized educational institutions kept for the exclusive use of conveying pupils of the institutions. The vehicle in question falls in this category.

23. The provisions of Section 13(3) of the Taxation Act provide that the exemption may be granted subject to the conditions as may be specified in the notification. There are no conditions specified in the notification, which would be so applicable. However, Rule 11 of the Taxation Rules is statutory in character and provides for the manner of exemption of the vehicle(s) from taxation under Section 13(3) of the Taxation Act. The absence of any conditions in the notification would, thus, not abrogate the requirements of Rule 11 of the Taxation Rules.

24. It would, thus, be expected that a registered owner would be required to file an application in Form VI. However, it is not in dispute that no such forms were being filed as a practice by the schools. In fact, the defense taken in this behalf is that the same was under a mistake and due to computerization, the same occurred. This is not a plea which can be accepted on behalf of the respondents. It is not a singular mistake, but across the board schools were not being called upon to file Form VI. The respondents also, thus, understood the exemption notification of 20.7.1963, erroneous as it may be, that once the exemption was obtained, the same would continue to be in operation. The said interpretation is also apparent from the fact that the certificate of fitness was being issued from year to year. Rule 73 of the said Rules specifically provides for the requirements for issuance of such a certificate and no vehicle can be plied except with that certificate in terms of the provisions of Section 56 of the said Act. Rule 73 of the said Rules requires that such a certificate cannot be issued unless the application for grant or renewal of a certificate is accompanied by a tax clearance certificate. On each occasions when such an application was made, the same was made with the original certificate of registration endorsing that the tax was exempt and that is why the fitness certificates were also being issued with the endorsement of tax exempt.

25. It is also to be appreciated that the certificate of registration issued by the registering authority on 5.7.1996 against the column 'Road tax paid up to' made the endorsement 'Tax Exmpt'. The period was, thus, not specified as to up to which date was this exemption applying. The respondents cannot be permitted to rely merely on the original certificate of registration in favor of the Bosco Public School which had specified that the tax was paid up to 30.6.1992. In case there was any tax dues from Bosco Public School, there was no occasion to transfer the vehicle in favor of the petitioner without clearing all such tax dues. It appears that the respondents suddenly woke up after the directions were passed by the, Supreme Court.

26. In my considered view, there can be in such a situation no question of any recovery of past tax much less penalty on this account. If the respondents had taken a contrary view at an earlier period of time, the petitioner and similar schools would have the option to immediately apply and would have so done. This is so since there is no dispute about the fact that had the petitioner applied for such an exemption, the same would have been granted to them. Learned Counsel for the respondents, in fact stated so, but submitted that since the petitioner had not applied, it was liable to pay the tax and penalty.

27. The respondents only in October, 1998 had called the schools and even as set out in the counter affidavit, the same arose on account of the directions passed by the Supreme Court on 22.9.1998. A reading of the said directions would show that the matter related to the issue of pollution and while issuing directions for phasing out vehicles it came to notice of the Supreme Court that vehicles which were not registered or on which tax had not been paid in National Capital Territory of Delhi were plying in Delhi. It was in the context of such vehicles that the directions were made. The respondents seem to have misconstrued the directions as if there was a mandate not to grant any exemption. This is not so. The exemption notification continues to exist. The object of the directions passed by the Supreme Court was that if a vehicle plies in Delhi, it must one registered in Delhi and must consequently pay the road tax. However, as in the present case, if the vehicle is exempt from payment of tax in pursuance to a notification, it will not imply that still the party would have to pay the tax. The petitioner's vehicle and other such vehicles are registered in Delhi.

28. The petitioner has rightly relied upon the judgment of the Supreme Court in Video Electronics Pvt. Ltd.'s case (supra) to contend that once such an exemption notification has been validly issued, the same has to be construed as if it is contained in the Taxation Act itself. The Supreme Court neither interfered with the exemption notification nor with the provisions of the Taxation Act.

29. In fact, on clarification being sought by certain educational institutions the Supreme Court found force in the contention advanced by learned Counsel for the schools that the buses owned by the schools may not, strictly speaking, be treated as commercial vehicles, but as private buses. Furthermore, the Supreme Court noticed that Section 2(11) of the said Act defines 'educational institution bus' and a special category was carved out in favor of such buses owned by the educational institutions.

30. In October, 1998 when the respondents started looking at the matter afresh, it wanted the schools to comply with the requirement of Rule 11 of the Taxation Rules and apply in Form VI. It was certainly open to the respondents to do so but in future. This is also apparent from the fact that the last certificate of fitness given in the present case expired only on 17.10.2000 and had been issued on 18.10.1999. The petitioner was willing to apply and so applied in that form. What was, however, put against the petitioner was that there were arrears against the dues of tax since Form VI had not been earlier filed and first those arrears had to be cleared before the exemption was granted. Since I am of the considered view that there was no such arrears nor could the same be recovered, the petitioner was liable to be granted the said certificate forthwith on such an application which was made well within time.

31. It has also to be noticed that Section 11 of the Taxation Act, under which the penalty has been imposed, requires a hearing to be given before such penalty is imposed, but in all cases, apparently the penalty has been imposed in a mechanical manner without even considering that the fault, if at all, lie with the respondents. In view of the exemption notification becoming part of the Taxation Act in terms of the observations made by the Supreme Court in Video Electronics Pvt. Ltd.'s case (supra), Form VI is only a manner of applying for such an exemption. This is especially so in the present case as it is not disputed that the petitioner was entitled to the exemption, if such an application had been made earlier.

32. The last plea of the respondents, which has to be considered, is based on the claim of alternative relief. It cannot be disputed that the same is not a bar to the exercise of jurisdiction of this Court under Article 226 of the Constitution of India, but normally the party should be relegated to the alternative remedy. The present petition has been pending in this Court since the year 2001 and all the relevant pleadings have been filed. The matter also relates to the very jurisdiction and the manner in which the tax is sought to be recovered. I do not think this is a fit case at this stage to relegate the parties to the remedy of an appeal.

33. A writ of mandamus is, thus, issued quashing the decision of the respondents to recover arrears of road tax on account of the fact that Form VI had not been filed and, thus, the petitioner is entitled to refund of the amount deposited amounting to Rs. 63,257/-. In view of the payment having been made by the petitioner without prejudice to its rights and contentions and the directions contained in the Order dated 19.3.2001, the petitioner is also entitled to interest on this amount from the date of deposit to the date of payment. The rate of interest is quantified at 6% per annum.

34. The writ petition is allowed with cost of Rs. 7,500/-.