Summary
Manufacturers and dealers challenged motor-vehicle tax on vehicles held in their businesses and penalties for delayed payment. The Supreme Court sustained the Bihar levy: possession of road-suitable vehicles attracted the distinct charge, unaffected by the central amendment removing manufacturers from the definition of dealer. The statutory penalty for delayed payment was also upheld after notice and hearing.
Issues
- Whether the State could tax manufacturers’ and dealers’ possession of road-suitable vehicles notwithstanding changes to the central registration law and payment under other charging provisions.
- Whether the asserted bona fide challenge to tax liability defeated the prescribed penalty for delayed payment.
Provisions considered
- Sections 5 and 6, Bihar Motor Vehicles Taxation Act, 1994The registered-owner charge and the charge on manufacturers’ or dealers’ possession operated in different contexts; Schedule III rates under section 6 applied at the latter stage. (¶¶ 3, 4, 23, 24)
- Section 23, Bihar Motor Vehicles Taxation Act, 1994Non-payment within the prescribed period attracted the prescribed penalty for breach of the statutory duty. (¶¶ 27, 29, 30, 31)
- Rule 4, Bihar Motor Vehicles Taxation RulesThe prescribed graduated penalties for delayed payment applied; the earlier rejection of the claimed discretion had attained finality. (¶¶ 28, 29)
- Seventh Schedule, List II, Entry 57, Constitution of IndiaThe power to tax vehicles suitable for road use supported the levy on the vehicles possessed by the manufacturers and dealers. (¶¶ 19, 20)
Held
- Taxing possession of vehicles suitable for road use fell within the State’s legislative competence under Entry 57. (¶¶ 19, 20)
- The central amendment to the definition of dealer did not remove the State levy, which expressly covered manufacturers as well as dealers and occupied a different legislative field. (¶¶ 21, 22, 23)
- The words “in lieu of” referred to the applicable rate schedule. The registered-owner tax and the manufacturer/dealer possession tax arose in distinct contexts and did not give the appellants the claimed exemption. (¶ 24)
- The specific statutory penalty provisions governed the default. The reliance on Hindustan Steel did not defeat liability, and penalties imposed after show-cause notices and hearing were sustained. (¶¶ 27, 28, 29, 30, 31)
Result
All appeals dismissed; tax liability under section 6 and the challenged penalties sustained.