COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM, KERALA versus MIS K.T.C. AUTOMOBILES

Citation: [2016] 1 S.C.R. 994 · Decided: 29-01-2016 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Dismissed

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Judgment (excerpt)

A 
[2P' '·I I S.C.R. 994 
COMMISSIONER OF COMMERCIAL TAXES, 
THIRUVANANTHAPURAM, KERALA 
v. 
MIS K.T.C. AUTOMOBILES 
B 
(Civil Appeal No. 2446 of2007) 
c 
D 
E 
F 
JANUARY 29, 2016 
[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.] 
Kera/a General Sales Tax Act: s. 45A - Penalty for evasion of 
tax - A/legation against re~pondent-car dealer was that respondent 
showed the sale of cars from its Mahe Branch, wrongly arranged 
for registration under Motor Vehicles Act at Mahe and wrongly 
collected and remitted tax for those transactions under the provisions 
of Pondicherry Sales Tax Act while the sale of cars had concluded 
at Kozhikode Branch and by adoption of such means, respondent 
had derived advantage of paying sales tax in Pondicherry where 
the rate was lower and evaded payment of tax under the KGST Act 
in Kera/a - Department imposed penalty of Rs.86 /akhs upon the 
respondent - High Court set aside the order of penalty - Appeal by 
Department - Held: Technically though the registration of a motor 
vehicle is a post-sale event, the event of sale is closely linked in 
time with the event of registration - Neither the manufacturer nor 
the dealer of a motor vehicle can permit the intended purchaser 
having an agreement of sale to use the motor vehicle even for taking 
it to the registration office in view of the statutory provisions -
Motor vehicle remains in the category of unascertained or future 
goods till its appropriation to the contract of sale by the seller is 
occasioned by handing over its possession at or near the office of 
registering authority in deliverable and registrable state - Thus, 
sale is co-terminus with the registration of new motor vehicle - Jn 
the instant case, vehicles were registered at Mahe which lead to 
G conclusion that they were produced before the Registering Authority 
at Mahe prior to registration and thus sale concluded at Mahe -
Respondent was not guilty of evasion of tax - Penalty was thus 
rightly set aside by the High Court - Constitution of India, 1950 -
Article 286(2) - Central Sales Tax Act - s.4(2) - Sale of goods Act 
- s.4 - Constitution of India, 1950 - Article 286(2). 
H 
994 
COMMNR. OF COMMERCIAL TAXES, THIRUVANANTHAPURAM, 
KERALAv. K.T.C.AUTOMOBILES 
Dismissing the appeal, the Court 
HELD: l, It is only after obtaiuing valid registration under 
the Motor Vehicles Act, the purchaser gets entitled to use the 
vehicle in public places, Under the scheme of Motor Vehicles 
Act, 1988 and the Central Motor Vehicles Rules, 1989, the dealer 
cannot permit the purchaser to use the motor vehicle and thus 
enjoy its possession unless and until a temporary or permanent 
registration is obtained by him, Only thereafter, the vehicle can 
safely be said to be no more under possession of the dealer, 
Clearly, mere mentioning of engine number and chassis number 
of a motor vehicle in the invoice of sale does not entitle the 
intending purchaser to appropriate all the goods, i.e. the motor 
vehicle till its possession is or can be lawfully handed over to 
him by the dealer without violating the statutory provisions 
governing motor vehicles. Such transfer of possession can take 
place only when the vehicle reaches the place where the 
registering authority will be obliged to inspect for the purpose of 
finding out whether it is a roadworthy and register-able motor 
vehicle and whether its identification marks tally with those given 
in the sale invoice and the application for registration, With the 
handing over of the possessiou of a specific motor vehicle just 
prior to registration, the dealer completes the agreement of sale 
rendering it a perfected sale. The purchaser as an "owner" under 
the Motor Vehicles Act is thereafter obliged to obtain certificate 
of registration which alone entitles him to enjoy the possession 
of the vehicle in practical terms by enjoying the right to use the 
vehicle at public places, after meeting the other statutory . 
obligations of Insurance etc, Hence, technically though the 
registration of a motor vehicle is a post-sale event, the event of 
sale is closely linked in time with the event of registration. Thus 
seen, in practical terms though sale precedes the event of 
registration, in normal circumstances and as the law stands, it is 
co-termi.nus with registration of a new motor vehicle, [Paras 14) 
(1006-F-H; 1007-A-B, D-FJ 
2. Article 286(2) of the Constitution of India empowers the 
Parliament to formulate by making law, the principles for 
dete

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