M/s. Tata Motors Limited vs State of Jharkhand and Others

1.2 The High Court rightly concluded that amendment in Motor Vehicles Act (Central Act) 1988 would have no relevance to the provisions contained in the Bihar Act. Whether the definition of a dealer includes manufacturer or not would be immaterial inasmuch as under Section 6 of the Bihar Act, the Legislature has made provision to tax both the dealer as well as the manufacturer. [Para 21][1251-D-F]

1.3 The submission that the tax was in respect of motor vehicles in possession of the manufacturer in the course of his business as a manufacturer, or in possession of the dealer in the course of his business as a dealer under the authorization of trade certificate granted under the Central Motor Vehicle Rules, 1989, is accepted. The manufacturer comes in the possession of the motor vehicle after the vehicle is manufactured and is suitable for use on roads. The dealer in the course of his business of getting the Motor Vehicle from the manufacturer and selling it to a customer comes in the possession of the Motor Vehicle on the basis of a trade certificate granted under the Central Motor Vehicle Rules, 1989. Neither earlier nor now there is any obligations in a manufacturer to obtain a trade certificate under the 1989 Rules for carrying on the business of a manufacturer. [Para 22][1252-B-E]

1.4 A challenge to the constitutionality of Section 6 laid by the appellants in the earlier round of litigation, in regard to the same Assessment Years, was repelled and constitutional validity of Section 6 was upheld in Telco case. Once Section 6 is held to be valid, it is only the interpretation thereof which was to be gone into by the High Court in this round, in order to find out whether the assessment orders passed in respect of these appeals were valid or not. On interpreting this provision, liability to pay tax under Section 6 is linked with the incidence of manufacturer or the dealer possessing the vehicle which is suitable for use on road during the the course of his business. [Para 23][1252-E-G] Tata Engineering and Locomotive Company Ltd. v. State of Jharkhand (TELCO case) AIR 1999 Patna 62 –

approved.

Bolani Ores Ltd. v. State of Orissa (1974) 2 SCC 777 ; Travancore Tea Estates Co. Ltd. & Ors. v. State of Kerala & Ors. (1980) 3 SCC 619 ; M/s Central Coal Fields Ltd. v. State of Orissa & Ors. 1992 Supp. (3) SCC 133 – referred to.

1.5 It was submitted that Section 6 uses the expression ‘in lieu of the rates specified in Schedule I’; that the tax which is to be paid is either as per Schedule I i.e. in accordance with Section

5 of the Bihar Act or at the annual rates specified in Schedule III; and that the words ‘in lieu of’ cannot be read as ‘in addition to’, cannot be accepted. Sections 5 and 6 operate in altogether different contexts. Under Section 5, tax is payable at the time of registration of the vehicle, which is payable by the registered owner. In contrast, Section 6 is the stage before that as it is on the event of the vehicle being possessed by the manufacturer or dealer. Therefore, the appellants are liable to pay tax under Section 6 of the Bihar Act. May be, Section 6 is not happily worded. But the intent is to convey that tax will not be payable as per Schedule I which is payable under Section 5 but in place thereof it would be payable as per Schedule III. [Para 24] [1253-A-D]

2.1 Section 23, in no uncertain terms, lays down that any person who does not pay the tax during the prescribed period shall pay a penalty at the rate prescribed by the State Government together with arrears of tax. Therefore, for non-payment of the tax within the prescribed period, penalty becomes payable at the rates specified in Rule 4. The vires of Section 6 were challenged in the High Court in earlier proceedings and this challenge was repelled. Further, since Rule 4 uses the expression ‘may’, on that basis it was also argued that this rule gives discretion to the Assessing Officer. That argument was also repelled in Telco case. This position in law has attained finality. [Para 29][1255-E-G]

2.2 While upholding the validity of Section 23 of the Act in Telco, insofar as penalty is concerned, the Court had set aside the same on the ground that before imposing the penalty, no show cause notice was issued. Permission was given to the tax authorities to take fresh decision after giving the show cause notice. Show cause notices were issued and after hearing the appellants, the penalty was imposed. In view thereof, the High Court rightly repelled the challenge against imposition of penalty. [Para 31][1256-B-D]

Hindustan Steel Ltd. v. State of Orissa (1969) 2 SCC

627 – held inapplicable.

State of U.P. & Ors. v. Sukhpal Singh Bal (2005) 7 SCC

615 – referred to.