1996 Supreme(Ori) 256

IN THE HIGH COURT OF ORISSA
P.K. Misra, D.M. Patnaik, JJ.
BISHNU MOHAN JENA - APPELLANT
Versus
REGIONAL TRANSPORT AUTHORITY AND OTHERS - RESPONDENT
Decided On : 03-10-1996

The instructions issued by the STA, which were issued to facilitate collection of tax from the original owner, clarified that the outstanding arrear as against the original owner should not be a ground for seizure of the vehicle or a disqualification for issuance of permit to the subsequent purchaser.

Headnote:

MOTOR VEHICLES TAXATION - LIABILITY OF SUCCESSOR TO PAY ARREARS - LIABILITY OF SUBSEQUENT PURCHASER - LIABILITY OF CORPORATION - LIABILITY OF ORIGINAL OWNER - INSTRUCTIONS ISSUED BY STATE TRANSPORT AUTHORITY - INTERPRETATION - EFFECT ON LIABILITY OF SUBSEQUENT PURCHASER - LIABILITY OF CORPORATION TO CLEAR UP ARREAR DUES - OFF-ROAD INTIMATION - VALIDITY - LEVY OF TAX - PERIOD.

Fact of the Case:

The petitioner purchased a vehicle in an auction held by the Corporation after it was seized from the original owner for non-payment of loan installments and road tax. The Regional Transport Authority (RTA) insisted on payment of arrear tax for a certain period as a condition for transfer of ownership and issuance of a permit. The petitioner challenged this demand, and the Corporation filed a connected writ petition seeking a direction to the RTA to act in accordance with the instructions issued by the State Transport Authority (STA).

Finding of the Court:

The court held that the provisions of the Orissa Motor Vehicles Taxation Act, 1975, make the subsequent purchaser or possessor of the vehicle liable to pay the arrear taxes which are otherwise payable by the original owner. However, the court also held that the instructions issued by the STA, which were issued to facilitate collection of tax from the original owner, clarified that the outstanding arrear as against the original owner should not be a ground for seizure of the vehicle or a disqualification for issuance of permit to the subsequent purchaser. The court further held that the RTA was required to proceed against the original owner by filing a certificate case and if any amount remained unpaid, the RTA could proceed against the Corporation, which became a successor-in-interest. The court also held that the Corporation was required to clear up the arrear dues if the same remained unpaid after institution of any certificate case against the original owner.

Issues: 1. Whether the subsequent purchaser is liable to pay the arrear taxes which are otherwise payable by the original owner? 2. Whether the instructions issued by the STA affect the liability of the subsequent purchaser? 3. Whether the RTA can proceed against the Corporation for the arrear dues if the original owner fails to pay? 4. Whether the Corporation is required to clear up the arrear dues if the same remain unpaid after institution of any certificate case against the original owner? 5. Whether the off-road intimation given by the Corporation is valid and affects the levy of tax?

Ratio Decidendi: 1. The court held that the provisions of the Orissa Motor Vehicles Taxation Act, 1975, make the subsequent purchaser or possessor of the vehicle liable to pay the arrear taxes which are otherwise payable by the original owner. However, the court also held that the instructions issued by the STA, which were issued to facilitate collection of tax from the original owner, clarified that the outstanding arrear as against the original owner should not be a ground for seizure of the vehicle or a disqualification for issuance of permit to the subsequent purchaser. 2. The court held that the instructions issued by the STA affect the liability of the subsequent purchaser in the sense that the RTA cannot insist on payment of arrear dues from the subsequent purchaser before transferring ownership of the vehicle and issuing a permit. 3. The court held that the RTA can proceed against the Corporation for the arrear dues if the original owner fails to pay, as the Corporation becomes a successor-in-interest. 4. The court held that the Corporation is required to clear up the arrear dues if the same remain unpaid after institution of any certificate case against the original owner, as per the conditions of sale agreed upon between the Corporation and the purchaser. 5. The court held that the off-road intimation given by the Corporation is valid and affects the levy of tax, as the Orissa Motor Vehicles Taxation Act does not specify that the motor vehicle has to be kept within the jurisdiction of the RTA to whom the required intimation is given.

Final Decision: The court directed the RTA to allow change of ownership in the name of the purchaser without insisting upon payment of arrear dues, and to proceed against the original owner for realization of arrear dues by filing a certificate case. The court also directed the Corporation to pay any amount on account of the arrear tax dues of the original owner, if the same remained unpaid after institution of any certificate case against the original owner. The court further held that no tax was leviable for the period from 19-6-1995 to 30-6-1996, as the Corporation had given off-road intimation for that period.