Section 6 of the Bihar Motor Vehicles Taxation Act provides for imposing a tax liability on persons who possess vehicles suitable for the use on roads during the course of business. Some vehicle manufacturers and dealers moved before the Patna High Court contending that mere possession of vehicles attracts tax liability under the said provision, and cited the tax is payable under section 7 of the act. The Patna High Court, however, dismissed their pleas on account of which the petitioners moved before the apex court.
The Supreme Court comprising Justice MR Shah and Justice AK Sikri delivered a judgement unfavourable to the appellants. The Hon’ble bench stated that the provision is enacted under Entry 57 of List II of the VIIth Schedule of the Indian Constitution, and it does not empower the State Legislature to impose a tax on mere possession. In concurrence with the High Court, the apex court held that imposition of the tax is within the competence of the State Legislature.
The court found section 5 and 6 of the act to be operating in different contexts. Section 5 deals with tax payable at the time of registration of the vehicle by the registered owner; Section 6 is attracted when the vehicle comes into possession of a manufacturer or dealer. Furthermore, the court observed the interpretation had to be taken into account to ascertain the validity of assessment orders passed in respect to these appeals. Section 6 has nexus with the manufacturer or dealer possessing vehicles suitable for use on roads during the course of business.
Relying on the above, the Supreme Court concluded that the vehicle manufacturers and dealers are liable to pay tax under section 6 of the Bihar Motor Vehicles Taxation Act.
Courtesy/By: Sandeep G
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20 Dec 2018
