A single bench of the Kerala High Court recently passed a judgment that clarified the legal stance concerning a debated issue of whether the Transport Authorities and Officers in Kerala can compel owners of those vehicles which are registered in the Union Territory of Puduchheri and being used in the State of Kerala for long periods, to pay lifetime tax on such vehicles for their use in the State of Kerala.
Section 40 of the Motor Vehicles Act, 1988 states that every owner of a motor vehicle shall cause the vehicle to be registered by a registering authority ‘in whose jurisdiction he has the residence or place of business where the vehicle is normally kept’.
Taxation of vehicles is a subject of legislation in the Concurrent List, meaning that both the Centre and the States can levy tax on vehicles, and rhetorically, the laws made by the Centre have precedence over those made by the State. The State of Kerala has its own vehicle taxation law, called the Kerala Motor Vehicles Taxation Act, 1976, Section 3 (6) of which states that when non-transport vehicles registered outside the State of Kerala are used in Kerala for more than 30 days, the Government can levy tax upon such vehicle.
Recently, transport authorities imposed lifetime tax on the vehicles which were registered in Puducherry, but were being used in Kerala for over 30 days and likely to be used for a long period. The authorities claimed that the owners were trying to evade tax and that is why they registered their vehicles in the Union Territory of Puducherry.
The High Court held that if the documents furnished by the owners of the vehicles are true and genuine, showing that they are entitled to register their vehicles in Puducherry, then they cannot be compelled to pay lifetime tax as if they were registered in the State of Kerala, however, when the period of such use exceeds 30 days, tax can be levied upon the vehicle. Exemption is granted to vehicles only if they are not ‘used’ in Kerala during that period, and a prior request has to be submitted to the Road Transport Officer (RTO).
The High Court also held that such orders imposing tax cannot be issued without allowing a reasonable opportunity of hearing to the owners of such vehicles. The Transport Authorities are bound to observe the principles of natural justice before issuing such an order. Thus, a notice is a sine qua non before issuing an order to such vehicle owners.Subscribe Taxscan AdFree to view the Judgment