U.P. Motor Vehicles Taxation Act, 1997 : ss. 2 (h), 4, 9, 10,
12 and 20 – Payment of tax – Non-use of vehicle and refund of tax – Financier of motor vehicle/transport vehicle in respect of which hire-purchase, lease or hypothecation agreement entered – Liability to pay tax from the date of taking possession of the vehicle – Appellant – financier extended loan for purchase of transport vehicle – However, due to default in payment, took back the possession of the vehicle – As regards, the liability to pay tax under the 1997 Act, the High Court held that the appellant being in possession of the transport vehicle liable to pay tax under the 1997 Act – Held: Financier in possession of the transport vehicle owing to nonpayment of loan amount is an ‘owner’ u/s. 2 (h) of the 1997 Act read with s. 2(30) of the 1998 Act – 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 u/s. 12 and has to comply with all the requirements for seeking the refund – However, in a case, under sub-section (2) of s. 12 and subject to surrender of the necessary documents as mentioned in sub-section
(2) of s. 12, the liability to pay the tax would not arise – Motor Vehicles Act, 1988.
Dismissing the appeal, the Court
HELD: 1.1 As per Section 2(h) of the U.P. Motor Vehicles Taxation Act, 1997 read with Section 2(30) of the Motor Vehicles Act, 1988, even a person in possession of the vehicle under the hire- purchase agreement or an agreement of sell or an agreement of hypothecation can also be said to be the “owner”. Therefore, a financier like the appellant, who is in possession of the transport vehicle in question owing to non-payment of the loan amount is an “owner” under the relevant provisions of the Act, 1997 and Act, 1988. [Para 8.3][445-D-E]
1.2 The requirement under law is to first pay the tax in advance as provided under Section 9 and thereafter to use the vehicle. In other words, it is ‘pay the tax and use’ and not ‘use and pay the tax’. Therefore, the submission on behalf of the appellant-financier that tax has to be paid at the time of use or thereafter cannot be accepted. However, in a case where, after the tax is paid as per Section 4(2- A) read with Section 9, the vehicle is not used and there is non-use of the vehicle, the operator and/or the owner, as the case may be, may apply and claim for refund as per Section 12 and may get the refund subject to fulfilling all the requirements as provided under Section 12. The question of refund will come only when the tax is first paid and thereafter on non-use, the tax paid is to be refunded, ofcourse subject to fulfilling the requirements of claiming the refund as provided under Section 12 of the Act, 1997. [Para 9, 9.1][446G; 447-B, C-D]
1.3 The owner or operator has to first pay the tax in advance and thereafter if the transport vehicle is not used for a continuous period of one month or more since the tax was last paid, he may have to apply for the refund, which may be granted subject to compliance of the necessary requirements as per first proviso to Section 12 and subject to satisfaction of the Taxation Officer that the transport vehicle has not been used for a continuous period of one month or more since the tax was last paid. 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. [Para 10, 10.1][447-E-H; 448-A]
1.4 The submission that the documents referred to in subsection (2) of Section 12 are not with the financier/owner and they remain with the registered owner and therefore such a financier/owner may not be able to get the refund under subsection (1) of Section 12 or exemption from payment of tax as per sub- section (2) of Section 12 is concerned, on the aforesaid ground, the liability of the owner/financier to pay the tax will not cease. It is for the financier to acquire the documents such as original registration certificate, permit, token etc. from the registered owner at the time of seizure of the vehicle. If, for any reason, the financier/owner is not able to secure the documents, then he has to follow the procedure for getting fresh certificate of registration as provided under Section 51 of the Act, 1988. Therefore, before seeking refund under sub-section (1) of Section
12 or before he is exempted from payment of tax under subsection (2) of Section 12, such an operator / owner has to comply with and fulfill all the conditions, which are mentioned therein. [Para 11][448-B-D]
1.5 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. The impugned judgment and order passed by the High Court does not warrant any interference by this Court. [Para 12][449B-E]
State of Maharashtra and Ors. v. Sundaram Finance and Ors. (1999) 9 SCC 1; Jagir Singh and Ors. v. State of Bihar and Ors. (1976) 2 SCC 942 : [1976] 2 SCR 80; Abdul Samad Abdul Hamid Shaikh v. State of
Gujarat Special Civil Application No. 5788 of 2012 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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