No Road Tax for NOC on Auctioned Govt. Vehicle Purchased by Paying Bid Amount and GST: Punjab & Haryana HC [Read Order]

The Punjab andHaryana High Court recently held that no road tax, interest or penalty can be demanded from a purchaser of a government auctioned vehicle for the purpose of obtaining a No Objection Certificate (NOC) where the buyer has already paid the requisite bid amount along with applicable Goods and Services Tax (GST).

The writ petitioner Jatinder Kumar had purchased a 2017 Maruti Ciaz through an e-auction conducted by the authorities of the Respondent State of Haryana. The petitioner deposited the service fee and earnest money deposit (EMD), and made a bid of ₹2,70,000.

Upon being declared the highest bidder, the petitioner paid ₹2,70,000 along with GST at 18% amounting to ₹48,600. The authorities issued a sale certificate and the vehicle was delivered to him with its existing registration in Haryana.

However, the petitioner used the vehicle in Chandigarh and sought to have it registered there. For this purpose, he applied for a No Objection Certificate from the Haryana authorities, to which the authorities stated that no NOC would be issued until the petitioner paid road tax along with interest and penalty, alleging liability under Rule 33E of the Haryana Motor Vehicle Rules, 1993.

The petitioner later filed an affidavit stating that such conditions were not applicable in his case and were applicable only on new vehicles or vehicles which are registered as transport vehicles or vehicles which are transferred into Haryana from other States.

Before the High Court, Saurabh Sudhir Bainsla appearing for the petitioner contended that he was not seeking registration in Haryana, but merely an NOC, and therefore, the demand for road tax and penalty was without authority of law.

State Counsel Akshit Pathania argued that as per Rule 33E of Haryana Motor Vehicle Rules, 1993 read with a relevant notification dated 29.09.2017, the petitioner was liable to pay motor vehicle tax within 30 days of purchase, failing which interest and penalty would accrue, and that the NOC could only be issued upon such payment.

The Bench of Justice Jagmohan Bansal noted that the auction conditions only required that the bid amount and the relevant GST be paid. Justice Bansal noted that the terms of the auction explicitly stipulated that the vehicle would be sold on payment of the bid amount and GST on an “as is where is” basis, without any requirement to pay additional taxes at the time of delivery.

The Court noted that under Rule 33E of the Haryana Motor Vehicle Rules, 1993, registration marks of government vehicles were required to be surrendered and a new registration mark assigned.

However, the authorities herein had handed over the vehicle with the existing registration number without requiring the petitioner to pay any additional fee or opt for retention of the number.

In such a situation, the Court held that the authorities could not subsequently impose tax, interest or penalty when the auction terms did not provide for such liability and when the petitioner was merely seeking an NOC. While nominal charges for issuance of NOC may be levied, taxes applicable to registration could not be demanded in such circumstances.

Accordingly, the High Court allowed the writ petition and directed the authorities to issue the NOC without insisting on payment of road tax, interest or penalty

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