IMPORTANT POINT
The jurisdiction of civil courts is impliedly barred by the Kerala Motor Vehicles Taxation Act, 1976, which provides specific forums for tax disputes.

JUDGMENT :

Johnson John, J.

1. This Second Appeal is before us on a reference. The liability to pay tax arrears of the bus bearing registration No. KLG-5247 is the dispute involved.

2. The plaintiff, who is the registered owner of the bus, entered into an agreement for sale of the bus to the 5th defendant on 10.03.1995. As per the terms in the agreement, the plaintiff has to clear all arrears of taxes and liabilities up to the date of the agreement and thereafter, the 5th defendant is liable for the same. After the sale agreement, the 5th defendant was in possession of the bus and in connection with the balance sale consideration, the plaintiff filed a suit, O.S. No. 226 of 1996, against the 5th defendant and the said suit was decreed. While so, the plaintiff received revenue recovery notice relating to arrears of tax on the vehicle for the period from 01.07.1995 to 30.09.1995. Hence, the plaintiff filed the suit for a declaration that the notice is null and void and that the 5th defendant is liable to pay the tax arrears claimed in the notice.

3. Defendants 1 to 4 filed written statement contending that the suit is not maintainable and the plaintiff, who is the registered owner of the vehicle, is liable to remit the arrears of tax. The 5th defendant filed written statement contending that there was no concluded sale and that the possession of the vehicle was returned to the plaintiff due to the intervention of the Circle Inspector of Police, Koyilandy. It is also contended that the plaintiff has not issued the necessary documents for transferring the registration and since the plaintiff repossessed the vehicle, the 5th defendant is not liable to pay the arrears of tax and sought for dismissal of the suit.

4. In the trial court, PW1 examined and Exhibits A1 to A4 were marked from the side of the plaintiff and no evidence was adduced from the side of the defendants. After trial and hearing both sides, the trial court dismissed the suit mainly on the following findings:

I. The suit is barred under Section 72 of the Kerala Revenue Recovery Act as the plaintiff has not succeeded in establishing any fraud on the part of defendants in initiating the revenue recovery proceedings.

II. The demand for arrears of tax is as per the provisions of the Kerala Motor Vehicles Taxation Act, 1976 (‘Act 1976’ for short) and the said statute create specific forum for appeal and revision and therefore, the jurisdiction of the civil court is impliedly barred.

III. Under Section 9 of the Act, 1976, liability to pay tax is joint and several on the registered owner and the person who is in possession or control of the vehicle.

5. Being aggrieved, the plaintiff preferred A.S. No. 73 of 1999 before the Subordinate Judge, Kozhikode. By the impugned judgment dated 25.11.2000, the First Appeal was allowed and the judgment of the trial court dated 20.10.1998 was set aside on the following findings:

I. Since the transaction is covered by the Sale of Goods Act, there is absolute sale of the vehicle by virtue of Exhibit A1 agreement.

II. Since there is a concluded sale accompanied by handing over of possession of the vehicle, the 5th defendant is liable to pay the arrears of tax for the period after Exhibit A1 agreement.

III. It is in evidence that the plaintiff produced a copy of Exhibit A1 before the 4th defendant and the circumstance of the case reveals a collusion between defendant Nos.4 and 5.

IV. Even if the notice demanding arrears of tax is passed on merits, the same is illegal and unsustainable, as the plaintiff is not liable to pay any tax arrears on the vehicle for the period after Exhibit A1 agreement.

6. We have heard both sides on the following substantial questions of law:

1. Whether the provisions of the Act, 1976 impliedly bar the jurisdiction of the civil court in the matter?

2. Whether the liability of a registered owner to pay tax of the vehicle will cease from the date of transfer of ownership and possession of the vehicle?

Point No. 1:

7. As noticed earlier