A two-Judge bench of the Supreme Court, on Monday directed the Karnataka Government to refund the lifetime tax collected from the owners of the vehicles registered outside but plied within the State beyond 30 days.
Justice Chelameswar and Justice Abdul Nazeer, however, allowed the State Government to take an undertaking from the vehicle owners that they would have to deposit the tax again in case the state succeeds in its appeal.
The Division Bench of Karnataka High Court earlier upheld the decision of the Single Bench through which the imposition of lifetime tax on vehicles outside the State was held to be unconstitutional on ground of non-competence of State Legislature to pass such legislation.
The earlier decision was on a petition filed by the vehicles owners who registered their vehicles outside the state of Karnataka plying for more than 30 days in the state through various writ petitions. The State Legislature made an amendment to section 3 of the Karnataka Motor Vehicles Taxation Act provides for a mandatory condition to levy tax on all motor vehicles suitable for use on roads at the rates specified in part A of the Act. Part A5 of the Act pertains to the Lifetime tax payable for Motor Cars, Jeeps, Omni Buses and Private Service Vehicles and is made dependent on the registration of vehicles.
It is emphasized that section 3 of the Act and the schedule would indicate that the levy of lifetime tax is directly linked to the registration of a vehicle, and that registration is the basis of taxation. The said amendment was challenged before the High Court through various writ petitions.
In consequent to the decision of the single bench that the amendment in question is invalid, the demand raised on the petitioners was quashed. Aggrieved by the decision, the State preferred a Writ Appeal before the Division Bench of the High Court against the Single Bench’s decision.
On further appeal before the Apex Court, the bench observed that “We do not see any reason to suspend the operation of the judgment under appeal. However, we are of the opinion that the ends of justice will be met in this case by directing that the appellants would refund the amount of tax already collected, as and when a demand from the owner of the vehicle which is registered in the State is made before them and make two endorsements (i) regarding the pendency of the instant appeals and (ii) that the amount of money refunded would be a charge on the vehicle during the pendency of these appeals and would be subject to the result of these appeals. Apart from that, the appellant-State is also entitled to take appropriate undertaking from the owner of the vehicle at the time of the payment of tax in the event of State succeeds in the instant appeals.”
Read the full text of the Order below.
