Auction Purchaser Liable to Pay Outstanding Tax on Vehicle Acquired: Himachal Pradesh HC [Read Order]

The Himachal Pradesh High Court held that an auction Purchaser is liable to pay the outstanding taxes on vehicles acquired through auction. It stated that there is no equity in taxation law and equity would only come into play in case there is no law operating in the field.

During a search and seizure operation linked to tax invasion, the Department of Excise and Taxation seized many automobiles that belonged to M/s Indian Techno Mac Company Ltd. An auction-cum-tender notice was then used to sell these cars and other assets on the grounds of "as is where is," "as is what is," and "whatever there is."

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Arif Khan, the petitioner, was proclaimed the winning bidder and went on to buy more cars. Ten of them were registered under the State of Himachal Pradesh's name. However, the petitioner discovered that the vehicles' taxes had been overdue for the previous eight years when he attempted to have the registration transferred into his name. He was informed that the registration certificates of those cars could not be changed into his name until the taxes were paid. This infuriated the petitioner, who filed a writ petition to be released from all outstanding taxes on the cars that were bought at auction.

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The petitioner argued that the State Government can grant an exemption from tax under Section 14 of the Himachal Pradesh Motor Vehicles Taxation Act, 1972, if the registered owner or person in control of the vehicle notifies the taxing authority in writing beforehand that the vehicle will not be used in any public place.

He added that the Excise and Taxation Department owned the vehicles before the auction and that it was their duty to have filed the necessary notification. In addition, the petitioner claimed that he was unfairly burdened with a substantial tax bill that was not his fault.

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The bench noted that in accordance with section 9 of the Himachal Pradesh Motor Vehicles Taxation Act, the onus of paying taxes shifts to the new owner if the tax-liable party transfers possession without paying the outstanding balance.

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The Court stated that a vehicle's registered owner or person in charge must have previously given written notice that the vehicle would not be utilized in a public area in order for an exemption under Section 14 of the Himachal Pradesh Motor Vehicles Taxation Act to be granted. In this instance, no such notification had been filed by the petitioner or the registered owner.

A division bench of Justice Tarlok Singh Chauhan & Justice Sushil Kukreja held thatIt's well established that taxation law lacks equity, and additional equity would only be relevant if there were no laws governing the subject. Equity must give way to the law in this case because there is already legislation in effect. Since the law always wins out when equity and the law clash, this is well established.

The dismissed the writ petition and directed the petitioner to comply with the tax liability and pay the tax due with respect to the vehicle purchased.

To Read the full text of the Order CLICK HERE

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