The impugned instruction dated 29th March, 2016, which changed the basis of levying the TC tax, is ultra vires the OMVT Act and is hereby quashed.

JUDGMENT

1. These appeals are directed against a judgment dated 18th May 2017 passed by the learned Single Judge in a batch of writ petitions rejecting the challenge made therein to the validity of a circular dated 29th March, 2016 issued by the Transport Commissioner-cum-Chairman, State Transport Authority (STA), whereby all the Regional Transport Officer (RTOs) were directed to collect tax from the dealers/manufacturers of motor vehicles on the basis of total number of vehicles possessed and registered during the entire year by the dealer. The learned Single Judge also negatived the challenge to the consequential demand notices issued by the various RTOs.

2. The learned Single Judge in the impugned judgment, which was common to the batch of writ petitions, chose to consider W.P.(C) No.5648 of 2017 by the Odisha Automobiles Dealers Association (OADA) as the lead petition. It was noted by the learned Single Judge, as far as the said petition was concerned, that OADA was a trust, the members of which were engaged in a business of hypothecation, leasing or hire-purchase of motor vehicles. As far as the Petitioners in the remaining writ petitions before the learned Single Judge were concerned, they were themselves dealers in motor vehicles and engaged in the business of selling of motor vehicles. It is not in dispute that all of them answered the description of the expression 'dealer' within the meaning of Section 2 (8) of the Motor Vehicles Act, 1988 (MV Act).

Relevant provisions

3. As far as the MV Act is concerned, it is an Act made by Parliament and it is therefore a 'Central Act'. It has been enacted with reference to Entry-35 of List-III of the Schedule-VII of the Constitution which reads as under:

'Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied.'

4. In terms of Section 39 of the MV Act, registration of a motor vehicle is compulsory. Section 39 of the MV Act reads as under:

'39. Necessity for registration No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner:

Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government.' 

5. As far as the proviso to Section 39 of the MV Act is concerned, reference is required to be made to Rule 33 of the Central Motor Vehicles Rules, 1989 (MV Rules) which reads as under: 

'33. Condition for exemption from registration. For the purpose of the proviso to section 39, a motor vehicle in the possession of a dealer or manufacturer of automobile or automobiles ancillaries or a test agency specified in rule 126 shall be exempted from the necessity of registration subject to the condition that he obtains a trade certificate from the registering authority having jurisdiction in the area in which the dealer or manufacturer of automobiles or automobile ancillaries or a test agency specified in rule 126 has his place of business in accordance with the provisions of this Chapter.'

6. Rule 33 of the MV Rules, therefore, exempts 'a dealer of automobiles or automobile ancillaries or a test agency in terms of Rules 126' from the necessity of registration, subject to obtaining 'a trade certificate from the registering authority'.

7. Rules 34 and 35 of the MV Rules provide the procedure for application, grant or renewal of the trade certificate (TC). The application has to be made in Form-16 appended to the MV Rules and has to be accompanied with an appropriate fee as specified in Rule 81 of the MV Rules.

8. The purposes fo