M/S. TATA MOTORS LIMITED versus STATE OF JHARKHAND AND OTHERS

Citation: [2018] 14 S.C.R. 1241 · Decided: 14-12-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

Judgment (excerpt)

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1241
M/S. TATA MOTORS LIMITED
v.
STATE OF JHARKHAND AND OTHERS
(Civil Appeal Nos. 5299-5304 of 2003)
DECEMBER 14, 2018
[A. K. SIKRI AND M. R. SHAH, JJ.]
Bihar Motor Vehicles Taxation Act, 1994: s. 6 – Tax payable
by a manufacturer or a dealer – Manufacturer/dealer of the motor
vehicles – Liability to pay tax u/s. 6, during the period the chassis
are in their possession-before they are delivered to the dealers and/
or the purchasers of the said vehicles – Held: Manufacturer/dealer-
appellants are liable to pay tax u/s. 6 – Liability to pay tax u/s. 6 is
linked with the incidence of manufacturer or the dealer possessing
the vehicle which is suitable for use on road during the course of
his business – Sections 5 and 6 operate in altogether different
contexts – Under s. 5 tax is payable at the time of registration of the
vehicle, which is payable by the registered owner – In contrast, s. 6
is the stage before that as it is on the event of the vehicle being
possessed by the manufacturer or dealer – Entry 57 of List II, VII
Schedule empowers the State Legislature to impose tax on vehicle
merely on possession – Furthermore, for the delayed payment,
penalty was rightly imposed – Constitution of India – Entry 57, List
II VII Schedule.
Dismissing the appeals, the Court
HELD: 1.1 The High Court rejected the submission that
the Bihar Act was enacted by the State Legislature under
Entry 57 of List II (State List) of the VIIth Schedule to the
Constitution , which entry does not empower the State Legislature
to impose tax on vehicle merely on possession, with the reason
that under this entry, taxes on vehicles which are suitable for use
on roads can be imposed and it was undisputed case of the parties
that the vehicles manufactured by the appellants are suitable for
use on roads. Therefore, section 6 of the Bihar Motor Vehicles
Taxation Act, 1994 which stipulates the manufacturer or a dealer
of a motor vehicle, in respect of the motor vehicle in his
possession in the course of business as such a manufacturer or
dealer shall pay tax, is within the legislative competence of
[2018] 14 S.C.R. 1241
1241
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1242                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
Entry 57. The reasoning given by the High Court is the correct
analysis of Entry 57 of List II of VIIth Schedule to the Constitution.
[Paras 19, 20][1251-A-E]
1.2 The High Court rightly concluded that amendment in
Motor Vehicles Act (Central Act) 1988 would have no relevance
to the provisions contained in the Bihar Act. Whether the
definition of a dealer includes manufacturer or not would be
immaterial inasmuch as under Section 6 of the Bihar Act, the
Legislature has made provision to tax both the dealer as well as
the manufacturer. [Para 21][1251-D-F]
1.3 The submission that the tax was in respect of motor
vehicles in possession of the manufacturer in the course of his
business as a manufacturer, or in possession of the dealer in the
course of his business as a dealer under the authorization of trade
certificate granted under the Central Motor Vehicle Rules, 1989,
is accepted. The manufacturer comes in the possession of the
motor vehicle after the vehicle is manufactured and is suitable
for use on roads. The dealer in the course of his business of
getting the Motor Vehicle from the manufacturer and selling it to
a customer comes in the possession of the Motor Vehicle on the
basis of a trade certificate granted under the Central Motor
Vehicle Rules, 1989. Neither earlier nor now there is any
obligations in a manufacturer to obtain a trade certificate under
the 1989 Rules for carrying on the business of a manufacturer.
[Para 22][1252-B-E]
1.4 A challenge to the constitutionality of Section 6 laid by
the appellants in the earlier round of litigation, in regard to the
same Assessment Years, was repelled and constitutional validity
of Section 6 was upheld in Telco case. Once Section 6 is held to
be valid, it is only the interpretation thereof which was to be gone
into by the High Court in this round, in order to find out whether
the assessment orders passed in respect of these appeals were
valid or not. On interpreting this provision, liability to pay tax
under Section 6 is linked with the incidence of manufacturer or
the dealer possessing the vehicle which is suitable for use on
road during the the course of his business. [Para 23][1252-E-G]
Tata Engineering and Locomotive Company Ltd. v. State
of Jharkhand (TELCO case) AIR 1999 Patna 6

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