Vehicle Registered in Puducherry but used in Kerala: Kerala HC upholds ₹15.37 Lakh Motor Vehicle Tax Demand

In a recent ruling, the Kerala High Court observed that although the vehicle was registered in Puducherry, it was used only in Kerala, and NIL GST ( Goods and Services Tax ) returns did not show any business activity in Puducherry. Therefore, the court upheld the demand of ₹15.37 lakh issued under the Kerala Motor Vehicles Taxation Act.

T P Trading Company, which is engaged in the manufacture and distribution of plywood and has branches across the country, purchased a car and registered it in Puducherry. The Kerala authorities later issued a demand notice under the Motor Vehicles Taxation Act, stating that the vehicle was liable to tax because it was being permanently used in Kerala.

The appellant filed a reply, and after an earlier direction from the High Court, the Sub-Regional Transport Officer issued a detailed notice demanding Rs. 15,37,660, followed by recovery proceedings.

The appellant challenged these steps before the Single Judge, relying on the vehicle’s Puducherry registration, the tax invoice issued in Puducherry, and the GST registration obtained in Puducherry, claiming that the vehicle was being used there. When the writ petition was dismissed, the appellant filed the present appeal.

The appellant’s counsel argued that the vehicle was connected to the company’s business activities in Puducherry and that the GST registration and returns filed there showed a genuine business presence. It was argued that the car was not being permanently used in Kerala and that the tax demand was unwarranted. The appellant also sought a remand for further enquiry.

The State argued that the GST returns filed in Puducherry were NIL returns, showing that no business activity was conducted there. They further argued that a notice issued to the appellant’s Puducherry address was returned with the remark “no such address,” while notices sent to the Kerala address were duly received.

The Revenue pointed out that the vehicle’s insurance was taken from an insurer in Perumbavoor, that six overspeeding tickets had been issued in Kerala, and that during a surprise inspection in March 2018, the vehicle was found at the Kerala residence of a partner of the appellant. They argued that these facts clearly showed use of the vehicle in Kerala, attracting tax liability under the statute.

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The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon observed that the NIL GST returns did not show any business activity in Puducherry and could not support the appellant’s claim of vehicle use there. The court pointed out that the returned notice from the Puducherry address, combined with proper service in Kerala, supported the view that the appellant was operating from Kerala.

The court also referred to the overspeeding tickets and the inspection report showing the vehicle in Kerala, and it observed that the appellant had not filed any reply affidavit to dispute these facts. The court explained that the burden was on the appellant to show that the vehicle was not being used in Kerala, and it had failed to do so.

The court ruled that the proceedings initiated by the transport authorities were valid and that no grounds existed to interfere with the Single Judge’s judgment. The writ appeal was dismissed.

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