The High Court quashed an STA instruction requiring dealers to pay vehicle tax on the total number of vehicles possessed and registered in a year. The court held the instruction was ultra vires the OMVT Act.
Impugned instruction dated 29.03.2016 and demand notices quashed; collection of tax on basis of said instruction to cease forthwith.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.A. No. 163 of 2017 and batch
In W.A. No.163 of 2017
M/s. Sushree Automotives
…. Appellant
Mr. Samvit Mohanty, Advocate
-versus-
State of Odisha and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.164 of 2017 M/s. Kanchan Murali Auto
M/s. Kanchan Murali Auto …. Appellant
Mr. Samvit Mohanty, Advocate
-versus-
….
State of Odisha and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.190 of 2017
Mahindra & Mahindra Financial …. Appellant
Services Ltd.
Mr. Jaydeep Pal, Advocate
-versus-
….
State of Orissa and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.153 of 2017 Jyote Motors
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Odisha and others Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 1 of 40
In W.A. No.180 of 2017 Odisha Automobiles Dealers …. Appellant
Association (OADA)
Mr. P.K. Dash, Advocate
-versus-
….
State of Odisha and another Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.189 of 2017
….
M/s. Urbasi Bajaj Appellant
Mr. S.S. Mohanty, Advocate
-versus-
….
State of Odisha and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.191 of 2017
Ashirbad Automobile and another …. Appellants
Mr. A.N. Das, Advocate
-versus-
….
State of Odisha and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.194 of 2017
….
M/s. Shree Durga Motors Appellant
Mr. D.K. Sahoo-1, Advocate
-versus-
…. State of Odisha and others Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 2 of 40
In W.A. No.195 of 2017 M/s. S.K. Motors
…. Appellant
Mr. Samvit Mohanty, Advocate
-versus-
State of Orissa and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.196 of 2017
Ananta Automobiles Private Ltd.
…. Appellant
Mr. S.S. Rao, Advocate
-versus-
….
State of Orissa and another Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.198 of 2017
….
M/s. Narayani Motors Pvt. Ltd., and Appellants
another
Mr. Avijit Pal, Advocate
-versus-
….
State of Transport Authority, Orissa Respondents
and others
Mr. Pravakar Behera, Standing Counsel
In W.A. No.215 of 2017 M/s. Chandan Automobiles
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 3 of 40
In W.A. No.223 of 2017 …. M/s. Paradeep Motors Appellant
Mr. S.S. Mohanty, Advocate -versus…. Respondents Mr. Pravakar Behera, Standing Counsel
State of Orissa and others
In W.A. No.233 of 2017 M/s. Varsa Motors …. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.250 of 2017 …. M/s. Sanjibani Motors Pvt. Ltd. Appellant Mr. Sidharta Ray, Advocate -versus…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.251 of 2017 …. M/s. Sanjibani Motors Pvt. Ltd. Appellant Mr. Sidharta Ray, Advocate -versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel
In W.A. No.257 of 2017 M/s. Maa Tarini Motors
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 4 of 40
In W.A. No.282 of 2017 M/s. Choudhary Automobiles
…. Appellant
Mr. S.S. Mohanty, Advocate -versus-
State of Orissa and others
…. Respondents Mr. Pravakar Behera, Standing Counsel
In W.A. No.336 of 2017 M/s. Sova Automobiles
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
….
State of Orissa and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.382 of 2017
M/s. Bharat Automobiles …. Appellant
Mr. S.S. Mohanty, Advocate
-versus-
….
State of Orissa and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.222 of 2017
Sundaram Finance Ltd …. Appellant
Mr. Nalinikanta Dash, Advocate
-versus-
State of Orissa and another
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.232 of 2017 M/s. Bina Motors …. Appellant Mr. S.S. Mohanty, Advocate
-versus-
State of Orissa and others
…. Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 5 of 40
In W.A. No.236 of 2017
M/s. Consortium Automobiles Pvt. Ltd. …. Appellant
Mr. S.S. Mohanty, Advocate
-versus-
…. State Transport Authority and others Respondents Mr. Pravakar Behera, Standing Counsel
In W.A. No.237 of 2017 …. M/s. Ayush Automobiles Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.242 of 2017 …. M/s. Shree Gayatri Motors Appellant Mr. Ramesh Agarwal, Advocate -versus…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.243 of 2017 …. M/s. Shree Laxmi Enterprises Appellant Mr. Ramesh Agarwal, Advocate -versus-
State of Orissa and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.244 of 2017 M/s. R.B. Motors
…. Appellant
Mr. Ramesh Agarwal, Advocate
-versus-
State of Orissa and others
…. Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 6 of 40
In W.A. No.245 of 2017 M/s. Shree Shyam Motors
…. Appellant
Mr. Ramesh Agarwal, Advocate -versus-
State of Orissa and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.246 of 2017
M/s. Shree Bimla Motors …. Appellant
Mr. Ramesh Agarwal, Advocate
-versus-
….
State of Orissa and others Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.253 of 2017
OSL Motors Pvt. Ltd. …. Appellant
Mr. Jaydeep Pal, Advocate
-versus-
….
State Transport Authority, Odisha and Respondents
others
Mr. Pravakar Behera, Standing Counsel
In W.A. No.330 of 2017
M/s. Mishra Auto …. Appellant
Mr. Jaydeep Pal, Advocate
-versus-
…. State Transport Authority, Odisha and Respondents others
Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 7 of 40
In W.A. No.142 of 2018 M/s. Sanjibani Motors
…. Appellant
Mr. S.S. Mohanty, Advocate
-versus-
State of Orissa and others
…. Respondents Mr. Pravakar Behera, Standing Counsel
In W.A. No.143 of 2018 M/s. Sanjibani Motors
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.381 of 2018 M/s. International Tractors …. Appellant Mr. Deepak Kumar Mohapatra, Advocate -versus…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel In W.A. No.188 of 2017 …. M/s. Gugnani Motors Appellant Mr. S.S. Mohanty, Advocate
-versus-
State of Orissa and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.24 of 2018 M/s. Jaiswal Motors
…. Appellant Mr. S.S. Mohanty, Advocate
-versus-
…. State of Orissa and others Respondents Mr. Pravakar Behera, Standing Counsel
W.A. No. 163 of 2017 and batch Page 8 of 40
In W.A. No.34 of 2019 M/s. Om Automobiles
…. Appellant
Mr. Avijit Pal, Advocate
-versus-
State Transport Authority, Odisha and others
…. Respondents
Mr. Pravakar Behera, Standing Counsel
In W.A. No.197 of 2017 Ashirbad Automobile, Bhubaneswar and another
…. Appellants
M/s. A. N. Das and associates, Advocates
-versus-
….
State of Odisha and others Respondents
Mr. Pravakar Behera, Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE M.S. RAMAN
JUDGMENT
21.12.2022
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Relevant provisions
“Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied.”
“39. Necessity for registration
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No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner:
Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government.”
“33. Condition for exemption from registration.
For the purpose of the proviso to section 39, a motor vehicle in the possession of a dealer or manufacturer of automobile or automobiles ancillaries or a test agency specified in rule 126 shall be exempted from the necessity of registration subject to the condition that he obtains a trade certificate from the registering authority having jurisdiction in the area in which the dealer or manufacturer of automobiles or automobile ancillaries or a test agency specified in rule 126 has his place of business in accordance with the provisions of this Chapter.”
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application has to be made in Form-16 appended to the MV Rules and has to be accompanied with an appropriate fee as specified in Rule 81 of the MV Rules.
“41. Purposes for which motor vehicle with trade certificate may be used:-
The holder of a trade certificate shall not use any vehicle in a public place under that certificate for any purpose other than the following:
(a) for test, by or on behalf of the holder of a trade certificate during the course of, or after completion of, construction or repair; or
(b) for proceeding to or returning from a weigh bridge for or after weighment, or to and from any place for its registration; or
(c) for a reasonable trial or demonstration by or for the benefit of a prospective purchaser and for proceeding to or returning from the place where such person intends to keep it; or
(d) for proceeding to or returning from the premises of the dealer or of the purchaser or of any other dealer for the purpose of delivery; or
(e) for proceeding to or returning from a workshop with the objective of fitting a body to the vehicle or painting or for repairs; or
f) for proceeding to and returning from airport, railway station, wharf for or after being transported; or
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(g) for proceeding to or returning from an exhibition of motor vehicles or any place at which the vehicle is to be or has been offered for sale; or
(h) for removing the vehicle after it has been taken possession of by or on behalf of the financier due to any default on the part of the other party under the provisions of an agreement of hire-purchase, lease or hypothecation.”
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Rules reveals that the dealer is expected to specify in column 5 “number of certificates required” and in column 6 “class of motor vehicles in respect of which certificate is required”. A declaration is appended to such form where the applicant declares that the TC is required by him “for bona fide trade purpose”.
“Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry-35 of List-III”
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every vehicle of the description specified in Schedule I, “which is used personally or kept for personal use”.
5. Tax payable by Manufacturers and Dealers
Notwithstanding the provisions contained in Sections 3, 3- A, 4 or 4-A, a tax at the annual rate specified below shall be paid in advance by a manufacturer or dealer in motor vehicles in respect of the vehicles in his possession in the course of his business as such manufacturer or dealer under the authorization of trade certificate granted under the Motor Vehicles Rules:
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Page 15 of 40
“FORM XIV (See Rule 36(1))
Furnishing of information in respect of the vehicles sold by manufacturer or dealer
- Name of the Dealer or Manufacturer (Trade Certificate Holder) with address.
| Date | Sale | Name and | Engine | Chassis | Trade | RTO | to |
|---|---|---|---|---|---|---|---|
| of | letter | address of | No. | No. | Regd. | whom | |
| Sale | No. | purchaser | Mark | endorsed | for | ||
| allotted | Registrati | on |
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(1) (2) (3) (4) (5) (6)
(7)
Signature of Trade Certificates Holder
Certificate
This is to certify that the maximum number of vehicles covered under the trade certificates has never been exceeded at any point of time
Signature of Trade Certificate Holder
Impugned communication
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"To,
All Regional Transport Officers,
Sir,
It is observed that there is huge leakage of M.V revenue at dealer/manufacturer points while collecting tax for vehicle in their possession.
As per the Rule-35 of CMVR-1989 an application for the grant/renewal of trade certificate shall be made in form-16 accompanied by appropriate fees as specified in Rule-81 by the dealer/manufacturer. Separate application shall be made for each class of vehicles as per rule 34 of CMV Rules. On receipt of application from the dealers, the grant/renewal of trade certificate is issued under Rule-35 of CMVR-1989 by the Registering Authority to the dealers/manufacturers.
Accordingly under Rule-36 of OMV Rules 1993(1). The manufacturer/dealer shall furnish to the registering Authority having jurisdiction in the locality with the information in Form XIII & XIV, in respect of the vehicles received in stock & sold by him during every month by 15th of the succeeding month.
(2) The manufacturer/dealer should furnish the copy of the certificate in form-21 prescribed under rule-47 of CMV Rule1989 to the registering authority & the concerned region when the vehicle is intended to be registered.
All the dealers or manufacturers are bound to submit monthly returns in form-XIII & XIV under rule-36 of OMV-1993. A certificate in form-XIV are being furnished to the registering authority that the maximum nos. of vehicles covered under the trade certificate has never been exceeded at any point of time. This needs to be obtained from each dealer/manufacturer scrupulously.
Section-5 of OMVT act 1975-entails that- Notwithstanding the provisions contained in1 [Section 3,3-A,4,4-A or 4-B], a tax at the annual rate specified below shall be paid in advance by a manufacture of dealer in Motor vehicles in respect of the vehicles in his possession in the course of his business as such manufacture or dealer under the authorization of trade certificate granted under the Motor Vehicles Rules.
While reviewing the mv revenue collection of different RTOs, it is found that the tax are being collected in advance from the dealers for the nos. of vehicles mentioned in their trade certificate which is not in conformity with the total no of registration of vehicles made by the dealers. You are therefore directed to collect the tax from the dealers/manufacturers on the basis of total no. of vehicles possessed & registered during the entire year by the dealer.
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Further, you are instructed to be more vigilant at dealer points through regular checking & conducting raids to collect the tax for the vehicles possessed by the dealers.
Transport Commissioner, Odisha.”
Grounds of challenge before the Single Judge
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also pointed out that the assumption that the dealer had kept vehicles in his possession beyond that specified in the TC was not preceded by any enquiry and there was no show-cause notice issued to such dealer before raising the demand.
Impugned order of the learned Single Judge
(i) Section 5 of the OMVT Act is a charging Section in respect of a TC holder whereunder the dealer is liable to pay tax in respect of vehicles in his possession in the course of his business under the authorization of the TC granted under the MV Rules.
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(ii) Admittedly, the dealers who had been paying tax as per the TC issued against the maximum number of vehicles possessed at a given point of time and the same has also been paid in advance.
(iii) Section 5 was unambiguous that the tax thereunder shall be paid in advance by the dealer in respect of vehicles “in course of his business” under the authorization of TC. Possession of a vehicle by the dealer in the course of his business and sale thereof and consequential registration “are intrinsically connected to each other”.
(iv) The expression “vehicle in possession in the course of his business” has wide implication. “Therefore, once the vehicle is in possession in course of the business of a dealer under the authorization of trade certificate, at the end of twelve months, if it is ascertained that the dealer was in possession of vehicles in excess of the number indicated in the trade certificate for which no advance tax has been collected, in that case, the dealer is liable to pay the tax in consonance with the circular issued by the opposite parties. Needless to say that under a trade certificate, the dealer is obliged to retain the number of vehicles mentioned therein and not beyond that at a given point of time, but that ipso facto cannot disentitle him to pay tax in respect of the vehicles in his possession in course of business. In other words, if the dealer possesses vehicles in course of his business, he is liable to pay the tax in consonance with the circular issued by the authority concerned."
(v) Since no vehicle could be sold for the purpose of registration without the dealer being in possession of such vehicle, if at the end of
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twelve months it was found that the dealer had possession of vehicles even not exceeding the number of vehicles in possession at a given point of time as per the TC issued, then he is liable to pay the tax “at the end of twelve months, if it is found that the dealer having remained in possession of number of vehicles even not exceeding the number of vehicles in possession at a given point of time as per the trade certificate issued, then he is liable to pay the tax as demanded by the authority concerned because such vehicles were in possession in course of his business."
Proceedings and pleadings in these appeals
“1. The Court would like the State to file an affidavit indicating clearly whether pursuant to the impugned
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letter/instruction dated 29th March, 2016 of the Transport Commissioner what is being charged per vehicle sold is the additional fee in terms of Section 5 of the Orissa Motor Vehicles Taxation Act, 1975 (OMVT Act). The Court would also like an affidavit to be filed on behalf of the Appellant whether the additional incidents of Trade Certificate Tax (TC Tax) in terms of Section 5 of the OMVT Act and Trade Certificate Fees (TC fees) in terms of Rule 81 of the Central Motor Vehicle Rules, 1989 has been passed on to the customer and has in fact been paid by the customer. Both sets of affidavits be filed with advance copies served on the other side before the next date.
“3. That pursuant to the impugned instruction dated 29.03.2016 issued by the Transport Commissioner, no extra tax at the annual rate has been collected from the vehicles under the possession of the manufactures or dealers of motor vehicles in course of business by the Taxing Officer-cum-RTOs in Odisha except the tax prescribed under Section 5 of the OMVT Act, 1975.”
| Sl.No. | Description of motor vehicle | Taxper vehicle |
|---|---|---|
| 1 | Motor Cycle | Rs.200/- |
| 2 | Motor vehicle other than motor cycles weighing not more than 3048 kilograms unladen. |
Rs.500/- |
| 3 | Motor vehicle other than motor | Rs.1000/- |
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cycles weighing more than 3048 kilograms unladen.
“3. That it is humbly submitted that not all dealers have passed on the additional incidence of Trade Certificate Tax (TC Tax) in terms of Section 5 of the OMVT Act and Trade Certificate Fees (TC Fees) in terms of Rule 81 of the Central Motor Vehicles Rules, 1989, to the customers. Some dealers may have passed on the additional incidence to the customers whereas others have paid it from their own resources.”
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Submissions on behalf of the Appellants
(i) The STA misconstrued the statutory provision and ignored the well-established and long-standing practice under which the tax under Section 5 of the OMVT Act was levied only in respect of the total number of vehicles as mentioned in the TC. Under the authority of the TC, the dealer was entitled to keep a certain number of vehicles in his possession. If the dealer was to pay tax under Section 5 for all the vehicles that came into his possession annually during the course of his business, then the qualifying expression “under the authorization of trade certificate” occurring in Section 5 would lose all significance. It would become irrelevant whether the dealer maintains the maximum number of vehicles authorized under the TC or not at any given point in time since anyway every vehicle sold by him had to suffer tax. Such an interpretation would render Section 5 of the OMVT Act totally redundant.
(ii) Section 5 of the OMVT Act had to be strictly construed since it was a charging section in a taxation statute. The Commissioner could not have changed the taxable event from vehicles in possession under a TC to all vehicles “possessed and registered during the entire year”. This in any event could not be done by mere instruction by the Commissioner.
(iii) The field of taxation for motor vehicles in respect of TC was already occupied by the MV Act, which was a Central Act and there was no further scope for any further taxation by the State in respect of TC. Further, the MV Rules being notified later than the OMVT Act
W.A. No. 163 of 2017 and batch Page 25 of 40
could prevail. Therefore, Section 5 of the OMVT Act was ultra vires the Constitution and beyond the legislative competence of the State. Reliance was placed on the judgment in Deep Chand v. The State of Uttar Pradesh AIR 1959 SC 648 , which has subsequently been followed in a large number of judgments of the Supreme Court.
Submissions on behalf of the STA
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Automobile v. State of Bihar AIR 2004 Jhar 426. The appeals filed against both the judgments were dismissed by the Supreme Court of India in Tata Motor Limited v. State of Jharkhand (2020) 15 SCC 438. In the said judgment, the Supreme Court reaffirmed the correctness of the judgment of the Patna High Court in M/s. Tata Engineering and Locomotive Company Limited (supra) . It was held that the mere fact that a manufacturer/dealer did not obtain a TC would not absolve such manufacturer or dealer the liability to pay tax under Section 6 of the BMVT Act in respect of vehicle in his possession in the course of his business.
Analysis and reasons
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Company Limited v. State of Bihar ( supra ) which was affirmed by the Supreme Court by the dismissal of Special Leave Petitions challenging the said decision. The said decision was reaffirmed by the Supreme Court in Tata Motor Limited v. State of Jharkhand ( supra ) in 2020. In particular, the following paragraphs of the latter judgment of the Supreme Court made the position abundantly clear:
“20. We may point out that before the High Court, the appellants had challenged the vires of Section 6 on the ground that the State Legislature lacks competence to make a provision of this nature. It was pointed out that Section 6 levies the tax on a manufacturer or a dealer of motor vehicles merely on “possession” thereof by such a manufacturer or a dealer. It was argued that the Bihar Act was enacted by the State Legislature under Entry 57 of List II (State List) of VII Schedule to the Constitution of India, which entry does not empower the State Legislature to impose tax on vehicle merely on possession. This entry reads as under:
“57. Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tram-cars subject to the provisions of Entry 35 of List III.”
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analysis of Schedule VII List II Entry 57 to the Constitution.”
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“vehicles in his possession in the course of his business” as dealer, “under the authorization of trade certificate granted under the Motor Vehicles Rules”.
“The nature of the tax imposed by a statute has to be determined by examining the pith and substance of the statute and by paying more attention to the charging section than to the basis or machinery adopted for assessment and collection of tax for the nature of tax is different from the measure of tax.”
“In fiscal legislation a transaction cannot be taxed on any doctrine of “the substance of the matter” as distinguished from its legal signification, for a subject is not liable to tax on supposed “spirit of the law” or “by inference or by analogy.”
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“The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. It has also been said that if taxing provision is “so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect.”
“It must also be borne in mind that the rule of strict construction in the sense explained above applies primarily to charging provisions in a taxing statute and has no application to a provision not creating a charge but laying down machinery for its calculation or procedure for its collection, and such machinery provisions have to be construed by the ordinary rule of construction.”
Haryana AIR 1990 SC 781 , the Supreme Court observed that: “It is well-settled that what is the taxable event or what necessitates taxation in an appropriate Statute, must be found out by construing the provisions. The essential task is to find out what is the taxable
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event.” In the present case, we are only concerned with the scope and ambit of one charging Section viz., Section 5 of the OMVT Act. The ‘taxable event’ in relation to the said charging section has to be ascertained.
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impugned communication instructed the RTO to find out the total number of vehicles “received in stock and sold” by such dealer. The yardstick applied was the “registration of vehicles made by the dealers”.
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thereunder. Where the number of vehicles exceeds the said number, then for every such excess vehicle an additional fee is chargeable. For instance, “for every ten or less number of vehicles in excess of ten” the additional fee chargeable is mentioned.
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statute which again would be impermissible in law. The amendment would have to be to the statute itself.
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dealer has in his possession under the TC. Accordingly, all the impugned demand notices issued to the respective Appellants both for TC tax and TC fees in respect of vehicles ‘possessed and registered’ in excess of the vehicles covered by the TC issued, are hereby quashed.
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(i) Section 5 of the OMVT Act is a charging Section and in a taxing statute, it has to be strictly construed.
(ii) The challenge to the constitutional validity of Section 5 of the OMVT Act is rejected.
(iii) The taxable event under Section 5 of the OMVT Act is the possession of vehicles by the dealer under the TC certificate issued under the MV Rules.
(iv) Section 5 is both the charging Section as well as the ‘machinery provision’. It indicates that TC tax will become payable in respect of the vehicles possessed by the dealer under the TC certificate and also specifies what is the tax payable if the number of vehicles found in possession under the TC certificate exceeds that number. It also clearly specifies that the tax is to be collected at an annual rate and in advance.
(v) The impugned instruction dated 29th March, 2016 changes the very basis of the above ‘taxable event’ as well as the portion of Section 5 of the OMVT Act in so far as it is also a “machinery provision”.
(vi) The change sought to be brought out under the impugned instruction dated 29th March, 2016 cannot be brought about by merely issuing an instruction under Rule 177 of the OMV Rules, but only by amending the statute itself.
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(vii) The impugned instruction dated 29th March, 2016 is therefore ultra vires the OMVT Act and is hereby quashed. The effect of this is that collection of TC tax and TC fees will not be hereafter be made in terms of the impugned instruction, but only strictly in accordance with Section 5 of the OMVT Act read with Rule 81 of the MV Rules.
(viii) Since there is ambiguity whether the dealers have passed on the additional incidence of its TC tax and the TC fees to the customers, no refund is required to be made to the Appellants of such excess TC tax and TC fee collected.
(S. Muralidhar)
Chief Justice
(M.S. Raman)
Judge
S.K.Guin/P.A.
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3 issues framed by the court
Whether the State Transport Authority could issue an instruction to collect tax on all vehicles possessed and registered during the year contrary to the statutory provision requiring tax only on vehic
Whether the impugned instruction dated 29th March, 2016, altering the taxable event under Section 5 of the OMVT Act, was ultra vires the Odisha Motor Vehicles Taxation Act.
Whether the demand notices issued based on the impugned instruction were valid in the absence of a show-cause notice and enquiry.
Colour shows how this judgement treated each authority
Deep Chand v. The State of Uttar PradeshReferred¶262
Deep Chand v. The State of Uttar Pradesh AIR 1959 SC 648 · Who else cites this
M/s. Tata Engineering and Locomotive Company Limited v. State of BiharRelied on¶34
M/s. Tata Engineering and Locomotive Company Limited v. State of Bihar, AIR 1999 Pat 62 · Who else cites this
Tata Motor Limited v. State of JharkhandRelied on¶36
Tata Motor Limited v. State of Jharkhand (2020) 15 SCC 438 · Who else cites this
Khyerbari Tea Co. v. State of AssamReferred¶43
Khyerbari Tea Co. v. State of Assam AIR 1964 SC 925 · Who else cites this
M.P. Cement Manufacturer's Association v. State of M.P.Referred¶43
M.P. Cement Manufacturer's Association v. State of M.P. (2004) 2 SCC 249 · Who else cites this
Gujarat Ambuja Cements v. Union of IndiaReferred¶43
Gujarat Ambuja Cements v. Union of India AIR 2005 SC 3020 · Who else cites this
Ormond Investment Co. v. BettsReferred¶42
Ormond Investment Co. v. Betts (1928) AC 143
Goodyear India Ltd. v. State of HaryanaReferred¶44
Goodyear India Ltd. v. State of Haryana AIR 1990 SC 781 · Who else cites this
2 provisions across 2 enactments
M/s. Sushree Automotives and others
State of Odisha and others
S. Muralidhar
M.S. Raman
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
