No. 18533 of 2001-o-Madras Refineries Limited(now presently Chennai Petroleum Corporation Ltd)Anna Salai v. The State of Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 01-07-2009CoramTHE HONOURABLE MR. JUSTICE F.M. IBRAHIM KALIFULLAandTHE HONOURABLE MR. JUSTICE B. RAJENDRANW.A. No. 2396 of 2001andW.A.M.P. No. 18533 of 2001-o-Madras Refineries Limited(now presently Chennai Petroleum Corporation Ltd)Anna Salai, TeynampetChennai – 600 018(Cause title accepted as per Order ofCourt dated 18.10.2001).. Appellant/PetitionerVersus1. The State of Tamil Nadu rep. By its Secretary to Government Commercial Taxes & Religious Endowments Department Fort St. George Chennai – 600 0012. The Special Commissioner and Commissioner of Commercial Taxes Ezhilagam, Chepauk Chennai – 600 0053.The Deputy Commercial Tax Officer,Nannilam... Respondents/Respondents Appeal filed under Clause 15 of Letters Patent against theOrder dated 08.08.2001 made in WP No. 18592 of 1994 and WMP No.28241 of 1994 on the file of this Court. WP 18592/1994:The Petition filed under Art.226 of the constitutionof India praying to issue a writ of Certiorarified Mandamus to callfor the records of the third respondent herein in RC No.1528/94/A2and quash the order therein dt.10.10.1994 and further direct him notto collect entry tax in respect of the value of chassis purchasedlocally in the State of Tamil Nadu.For Appellant :Mr. R.L. Ramani, Senior Counselfor Mr. Chandran Karuppiah https://hcservices.ecourts.gov.in/hcservices/ For Respondents :Mr. Haja NazarudeenSpecial Government Pleader (Tax)JUDGMENT(Judgment of the Court was delivered by F.M. IBRAHIM KALIFULLA, J)An interesting question as regards the demand for payment ofentry tax as contemplated in The Tamil Nadu Tax on Entry of MotorVehicles Act, 1990 has come up for consideration at the instance ofthe appellant, who sought for a clarification from the SpecialCommissioner and Commissioner of Commercial Tax, who, in hisclarification letter dated 29.07.1994 clarified that the entry taxhas to be paid on the full value of the new vehicle beingregistered, irrespective of the fact whether the chasis waspurchased in Tamil Nadu or elsewhere and it has already sufferedsales tax, hence, the appellant is liable to be assessed under theAct as a full vehicle since it is a new commodity, liable for newregistration under the Motor Vehicles Act.2.Shorn of unnecessary details, the required facts are thatthe appellant purchased a heavy vehicle chasis from M/s. AshokLeyland Limited for which necessary tax under the provisions ofTamil Nadu General Sales Tax Act was levied and paid. The saidchasis was sent by the appellant to Bombay for the purpose ofmounting a special tank and after completing the body building, thechasis, along with the tanker, was brought back to Tamil Nadu forwhich the appellant stated to have paid entry tax on the value oftank built on the chasis. When the appellant wanted to get thevehicle, namely, the fire truck registered under the provisions ofTamil Nadu Motor Vehicles Act, the question arose as to whether theappellant was liable to pay entry tax as contemplated under theprovisions of The Tamil Nadu Tax on Entry of Goods into Local AreasAct, 1990, hereinafter referred to as 'The Act', on the whole of thevehicle i.e., including the chasis, along with the body mounted onit. It was in the course of that process, when the registeringauthority insisted the appellant for payment of entry tax under theAct for the whole of the vehicle, the issue went before the thirdrespondent. When the proceedings were pending before the thirdrespondent, the appellant sought for a clarification from the secondrespondent, who in turn, clarified the position in his communicationdated 29.07.1994 to the following effect:-"The criterion for charging entry tax iswhether there is liability for new registrationin the local area of Tamil Nadu. If thee isliability for new registration, then the entrytax has to be paid on the full value of the newvehicle being registered, irrespective ofwhether the chasis was purchased originally inTamil Nadu or elsewhere.The entry tax is liable on the full vehicle(even if chasis was originally purchased in https://hcservices.ecourts.gov.in/hcservices/ Tamil Nadu and suffered Tamil Nadu General SalesTax and sent out for body building) since thefully built vehicle is a new commodity liablefor new registration under the Motor VehiclesAct."3.Subsequent to the clarification issued by the secondrespondent, the third respondent assessed the entry tax payable bythe appellant under the Act by order dated 10.10.1994 in a sum ofRs.4,94,339/- and after giving credit to the entry tax already paidby the appellant, determined the tax liability in respect of the twovehicles in a sum of Rs.5,93,496/-. Aggrieved by such assessment,the appellant has filed WP No. 18592 of 1994 and the learned Judge,having dismissed the writ petition, has come forward with thepresent writ appeal.4.We heard Mr. R.L. Ramani, learned senior counsel appearingfor the appellant and Mr. Haja Nazarudeen, learned SpecialGovernment Pleader for the respondents.5.In his illuminating submission, the learned senior counselfor the appellant contended that the appellant has purchased thechasis in this State, which had already suffered sales tax under theprovisions of the Tamil Nadu General Sales Tax Act, thereafter, tookthe vehicle to Bombay for mounting a tanker to be built on thechasis and after the tanker was mounted on the chasis and afterpaying necessary sales tax in the State of Bombay, brought back thetanker mounted on the chasis. Therefore, the only liability of theappellant can be in respect of the tanker alone and not on thechasis, inasmuch as, the chasis was not purchased and brought intothe State of Tamil Nadu for the purpose of sale. The learned seniorcounsel, by referring to the various provisions contained in the Actas well as the notification dated 12.03.1983, contended that havingregard to the specific reference to the body built on chasis ofmotor vehicles, which are meant for mounting of motor vehicles,having been separately mentioned in the said notification, for thepurpose of prescribing the rate of tax, the body, which was built inanother State and brought into the State of Tamil Nadu should beindependently and exclusively treated as motor vehicle for thepurpose of levy of tax under the Act. In support of his submission,the learned senior counsel for the appellant relied on the decisionof the Division Bench of Allahabad High Court reported in (i)(Commissioner of Sales Tax, Uttar Pradesh, Lucknow vs. Pritam Singh)22 STC 414 (ii) the Division Bench decision of the Andhra PradeshHigh Court reported in (Pothula Subba Rao vs. The State of AndhraPradesh) 30 STC 69 and (iii) the decision of the learned singleJudge of the Punjab and Haryana High Court reported in (Ambala CoachBuilders vs. The State of Haryana and another) 39 STC 44.6.The learned senior counsel for the appellant lastlycontended that in any event, the levy of tax at the rate of 20% bytreating the vehicle as one vehicle, as mentioned under Serial No.5of the notification dated 12.03.1993, in the impugned order dated10.10.1994, was not correct and therefore the same requires to be https://hcservices.ecourts.gov.in/hcservices/ corrected.7.As against the above submissions, the learned SpecialGovernment Pleader for the respondents contended that the levy ofentry tax under the Act has got its own special features and theaction of the third respondent, in having determined the taxliability, was, therefore, in accordance with the provisions of theAct and the same does not call for interference by this Court.According to the learned Special Government Pleader, the chasis,having been purchased by the appellant in this State, went out ofthe State and when it returned back with a tanker mounted on it, thecomposition of the vehicle changed in every respect and consequentlywhen the provisions of the Act are applied, the same call for levyof tax in the manner in which it was made by the third respondentunder the order, which was impugned in the writ petition. Thelearned Special Government Pleader also contended that if theappellant has got any grievance as regards the rate of tax, theappellant will have to work out his remedy before the appellateauthority constituted under the Act and in the manner prescribedtherein.8.Having heard the respective counsel, we are not inclinedto accede to the submissions of the learned senior counsel for theappellant. In order to determine the points raised in this appeal,it will be appropriate to refer to some of the provisions of the Actand its salient features. The required provisions are Section 2(a), 2 (b), 2 (c), 2 (d), 2 (g), 2 (i), 3 (2) and 4 (2) of the Act.The relevant part of the said provisions are as under:-2.Definitions.- In this Act, unless thecontext otherwise requires, -(a)"accessories" means the car air-conditioner, music system and any other articlefitted to a motor vehicle and which is notincluded in the original invoice.(b)"appellate authority" means anappellate authority appointed under Section 6;(d)"entry of motor vehicle into a localarea" with all its grammatical variations andcognate expressions, means entry of motorvehicle into a local area from any place outsidethe State for use or sale therein;(g)"importer" means a person who brings amotor vehicle into a local area from any placeoutside the State for use or sale therein; andwho owns the vehicle at the time of its entryinto the local area; (i)"motor vehicle" means a motor vehicleas defined in clause (28) of Section 2 of theMotor Vehicles Act, 1988;NOTES"The definition of this term in Section 2(28) of the Motor Vehicles Act, incorporated https://hcservices.ecourts.gov.in/hcservices/ here by reference is as under:--"motor vehicle" or "vehicle" means anymechanically propelled vehicle adapted for useupon roads whether the power of propulsion istransmitted thereto from an external or internalsource and includes a chasis to which a body hasnot been attached and a trailer; but does notinclude a vehicle running upon fixed rails or avehicle of a special type adapted for use onlyin a factory or in any other enclosed premisesor a vehicle having less than four wheels fittedwith engine capacity of not exceeding twenty-five cubic centimetres;(k)"Purchase value" means the value of amotor vehicle, as ascertained from the originalinvoice and includes the value of accessoriesfitted to the vehicle, insurance, excise duties,countervailing duties, sales tax, transport fee,freight charges and all other chargesincidentally levied on the purchase of a motorvehicle;Provided that, where purchase value of amotor vehicle is not ascertainable on account ofnon-availability or non-production of anoriginal invoice or when the invoice produced isproved to be false or if the motor vehicle isacquired or obtained otherwise than by way ofpurchase, then the purchase value shall be thevalue or price at which motor vehicle of likekind or quality is sold or is capable of beingsold, in open market.3.Levy of Tax –(1).......(2)The tax shall be payable by animporter in such manner and within such time asmay be prescribed.4.Reduction in tax liability – (1)......(2)Where an importer who, not being adealer in motor vehicles, had purchased themotor vehicle for his own use in any UnionTerritory, or any other State then his liabilityunder this Act shall, subject to such conditionsas may be prescribed, be reduced to the extentof the amount of tax paid, if any, under the lawrelating to General Sales Tax as may be in forcein that Union Territory or State;9.A conspectus reading of the various definition clausesreferred to above, in particular Section 2 (a), 2 (b), 2 (d), 2 (g),2 (i) and 2 (k) of the Act makes it clear that a body meant formounting on a chasis by itself does not fall under the definition of"motor vehicle" but by virtue of the definition 'accessories', underSection 2 (a) read along with Section 2 (k) would make such a body https://hcservices.ecourts.gov.in/hcservices/ mounted on the chasis, the value of which also to be determined forthe purpose of arriving at the purchase value of motor vehicle. Inother words, in order to assess the purchase value of the motorvehicle under Section 2 (k), the value of all accessories fitted tothe vehicle, along with certain components are also to be taken intoaccount. When we apply the above legal provision to the facts ofthis case, inasmuch as the motor vehicle of the appellant was thechasis owned by it, when it comes to the question of assessing itspurchase value, as a motor vehicle into the local area of thisState, with a tanker mounted on it, which was built in a Stateoutside the State of Tamil Nadu, the said tanker falls squarelywithin the definitions of 'accessories' and the value of suchaccessories along with the value of motor vehicle, as ascertainedfrom the original invoice had to be taken into account. It is onthe said value alone the entry tax liability can be assessed by theoriginal authority. There is no dispute that the appellant is an'importer' as defined under Section 2 (g) of the Act and by virtueof Section 3 (2) of the Act, the appellant is liable to pay EntryTax in the manner determined and as assessed by the thirdrespondent. So far as the provisions of reduction in tax liability,as provided under Section 4 (2) of the Act, the said benefit, in sofar as the tax paid on the chasis registered may not be available inthe light of the specific provisions contained in the said sub-section. We are therefore of the considered opinion that byapplying the above referred to provisions contained in Section 2 andSection 3 (2) of the Act, the liability falls on the appellant andthe impugned order dated 10.10.1994 was well determined. For thesaid reasons, we are not inclined to accept the submissions of thelearned senior counsel for the appellant by relying upon the variousdecisions cited before us and consequently, the submissions of thelearned senior counsel for the appellant has to be rejected.10.As far as the decision reported in (Commissioner of SalesTax, Uttar Pradesh, Lucknow vs. Pritam Singh) 22 STC 414, at theoutset, it will have to be stated that the definition clause, withreference to which the Division Bench of the Allahabad High Courtreached the conclusion is to the effect that the body mounted on achasis can be independently construed as a motor vehicle.Therefore, the said decision cannot be applied to the facts of thiscase, inasmuch as, the definition contained under the Act isdifferent from the definition, based on which the above conclusionwas reached by the Allahabad High Court. In the definitionconsidered by the Allahabad High Court, the Division Bench posed aquestion for itself as to whether the body of the motor vehicle is acomponent part of a motor vehicle. It was in that context, theAllahabad High Court took the view that the body mounted on thechasis, being a component of motor vehicle, would fall within thespecific provision, applicability of which was considered by theDivision Bench. Inasmuch as the specific provision contained in theAct is clear, which is different from the one considered by theAllahabad High Court, the same cannot be made applicable to thefacts of the case on hand.11.So far as the decision reported in (Pothula Subba Rao vs. https://hcservices.ecourts.gov.in/hcservices/ The State of Andhra Pradesh) 30 STC 69, that was a case arisingunder the Andhra Pradesh General Sales Tax with reference to whichalone the decision came to be rendered, wherein, it was pointed outby the Division Bench that by virtue of the specific item mentionedin the second Schedule of Andhra Pradesh General Sales Tax Act, thebody of motor vehicle would fall within the residuary clause ofcomponent part of motor vehicle and thereby it could beindependently treated as a motor vehicle. Here again, it will haveto be stated that having regard to the specific provisionscontained in the Act, as compared to the consideration which weighedwith the Division Bench of the Andhra Pradesh High Court, whichdealt with the issue in the light of the specific provisionscontained in the Andhra Pradesh General Sales Tax Act, whateverstated in the said decision cannot be applied to the case on hand.12.Similarly, the decision of the learned single Judge of thePunjab and Haryana High Court, reported in (Ambala Coach Buildersvs. The State of Haryana and another) 39 STC 44 also cannot beapplied to this case, inasmuch as, the said decision came to berendered by applying a particular entry in Schedule A of HaryanaGeneral Sales Tax Act, which provision varies in very many degrees,as compared to the provisions referred to in the earlier part of ourorder, as defined under the Act. We are therefore, not in aposition to apply any of the decisions to the facts of this case.13.Having regard to our above conclusion, we do not find anygood grounds to interfere with the order passed by the learnedsingle Judge upholding the impugned order. 14.As far as the contention of the learned senior counsel forthe appellant that based on different entries contained in thenotification dated 12.03.1993, fixing different rates of tax, weonly state that it is a matter, which is concerning the quantum oftax liability determined by the third respondent, for which remedyof appeal is provided under the Act. When once an order ofassessment under Section 8 of the Act is passed, the appellant isentitled to work out his remedy by way of an appeal under Section 13(1) of the Act, further appeal before the Joint Commissioner ofCommercial Tax as specified under Section 13 (2) of the Act,besides, a revision remedy available under Section 14 of the Act tothe Commissioner of Commercial Taxes. The only hurdle which maycome in the way of the appellant working out its appeal remedy isthe period of limitation prescribed under Section 13 (3) of the Actwithin which the appellant has to challenge the order passed by theoriginal authority i.e., within 30 days from the date of receipt ofthe order and that too after paying the entire amount of tax withpenalty, if any, in the Government Treasury.15.The present writ petition, challenging the impugned orderdated 10.10.1994, came to be filed by the appellant on 08.11.1994,i.e., within 30 days from the date of receipt of the order. It isstated that the appellant had the benefit of interim stay during thependency of the writ petition as well as the writ appeal by theDivision Bench of this Court. In such circumstance, we are of the https://hcservices.ecourts.gov.in/hcservices/ considered opinion that in the interest of justice, appellant shouldbe permitted to work out his remedy of appeal, as prescribed underSection 13 (1) of the Act, by complying with the condition imposedunder sub-section (3) of Section 13, whereunder the appellant isliable to pay the entire amount of tax with penalty, if any in theGovernment treasury. We say so, because the appellant hasdiligently challenged the correctness of the impugned order dated10.10.1994 by filing a writ petition and the period during which thewrit petition was pending and the further period when the writappeal before the Division Bench of this Court was pending all theseyears, should not stand in the way of the appellant working out itsstatutory remedy available under the Act, at least in so far as itrelates to the rate of tax applied by the third respondent.16.Therefore, while upholding the order of the thirdrespondent dated 10.10.1994 insofar as its decision that the wholeof the vehicle is liable to be assessed under the Act for thepurpose of levy of entry tax, if the appellant is aggrieved againstthe rate of tax applied in the impugned order, it is open to theappellant to work out its remedy by filing an appeal before theappropriate authority constituted under Section 6 of the Act, withina period of 15 days from the date of receipt of a copy of thisorder.17.The writ appeal fails and is dismissed. All Mps alsostand dismissed. No costs.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarrshTo1.The Secretary to Government Commercial Taxes & Religious Endowments Department, Fort St. George Chennai – 600 0012. The Special Commissioner and Commissioner of Commercial Taxes Ezhilagam, Chepauk, Chennai – 600 0053.The Deputy Commercial Tax Officer,Nannilam.+1cc to K.J.Chandran, Advocate Sr 28087PKB(CO)km/7.8.WA No. 2396 of 2001