Non-Renewal of Permit cannot be a Valid Ground for Exempting Vehicle Tax: Kerala HC [Read Judgment]

Kerala High Court-Tax Exemption-taxscan

The Kerala High Court, in a recent decision, dismissed a petition wherein the petitioners sought for a direction to exempt the levy of vehicle tax on ground that the permit were not renewed after the expiry of its validity.

The Court clarified that as per the provisions of the Motor Vehicle Taxation Act, no exemption can be granted unless the taxpayer submits an intimation in writing as provided under section 5 of the Motor Vehicle Taxation Act.

The Court further emphasized that the permits have not been renewed cannot be a reason for non-payment of vehicle tax.

In the instant case, the Court was considering a bunch of petitions praying for a direction exempting payment of tax in the absence of a valid permit. In one of the petition, the petitioner contended that heis not liable to pay tax for those periods the vehicle was not used nor kept for use as a stage carriage since no regular or temporary permit were issued to him after the expiry of the regular permit.

While interpreting the wordings of section 3(1)of the Motor Vehicle Taxation Act, the court noted that merely for the reason that a person does not use the vehicle, does not mean that he is not liable to pay tax.“It is enough that the vehicle is “kept for use”.

Hence there is liability to pay tax unless a person contends that he has not kept the vehicle for use. In fact, the petitioners in these cases do not have such a case as well. Then the only question is at what rate tax has to be paid as specified for such vehicle in the schedule.”

Further, it was held that, as persection 5 of the Act, a registered owner or the person having control of such vehicle has the right to claim exemption from payment of tax.

“If the registered owner or such other person in control of the vehicle gives previous intimation in writing to the Regional Transport Authority stating that such vehicle shall not be used for such period he shall not be deemed to have used or kept for use the vehicle for such period and no tax shall be paid in respect of such period. In other words, if a person has a case that he has not used or kept for use a motor vehicle and he should be exempted from paying tax, his only remedy is to submit an intimation in writing to the Regional Transport Officer in terms of Sec.5(1). This provision had been incorporated in order to enable non-users of the vehicle from payment of tax.”

While dismissing the petition, Justice A.M Shaffique concluded that “There is no dispute about the fact that the vehicles in question have been issued with permits for transport of passengers, in which event, petitioners are liable to pay tax under Sl.No.7 of the schedule. That the permits have not been renewed cannot be a reason for non-payment of tax and if the petitioners want to avail the benefit of exemption, they have to apply under Section 5 of the Motor Vehicle Taxation Act.”

Read the full text of the Judgment below.