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PUNJAB & HARYANA HIGH COURT
R.S.Narula, J.
Phul Bus Service
Versus
Financial Commissioner, Taxation, Punjab & Others
Civil Writ No. 1551 of 1967,
Decided On : OCTOBER 17, 1967
MOTOR VEHICLES ACT - OWNERSHIP TRANSFER - TAX LIABILITY - SALE OF GOODS ACT - REGISTRATION - ATTACHMENT - TAX LIABILITY OF TRANSFEREE - OWNERSHIP TRANSFER PROCEDURE - REGISTRATION CERTIFICATE - LIABILITY FOR TAX ARREARS - DISTRAINT AND SALE - OSTENSIBLE OWNERSHIP - REAL OWNERSHIP - BENAMI OWNERSHIP - WRIT PETITION - RELIEF.
Fact of the Case:
A bus owned by respondent No. 5 was attached by the State for recovery of arrears of passengers and goods tax. The petitioner, who claimed to have purchased the bus from respondent No. 5 in April 1964, filed a writ petition challenging the attachment on the ground that ownership of the bus had been transferred to him prior to the attachment. The State contended that the petitioner was not the full-fledged owner of the bus as the registration certificate was still in the name of respondent No. 5.
Finding of the Court:
The court held that ownership of a motor vehicle is transferred in the same manner and subject to the same limitations and rules as apply to all other movable property and that an absolute transferee of a motor vehicle does not cease to be an owner thereof merely because his name has not yet been substituted for the name of the transferor in the registration certificate of the vehicle issued under the Motor Vehicles Act. The court further held that the State was not acting without jurisdiction in attaching the bus for recovery of the amount, whatever it may be, which was due as arrears of passenger tax in respect of the vehicle in dispute itself for the period prior to the date of its transfer.
Issues: 1. Whether ownership of a motor vehicle is transferred in the same manner as ownership of other movable property under the Sale of Goods Act, or whether there are special provisions in the Motor Vehicles Act that govern the transfer of ownership of motor vehicles? 2. Whether the transferee of a motor vehicle is liable for tax arrears due in respect of the vehicle for the period prior to the transfer, even if the registration certificate has not been transferred to the transferee's name? 3. Whether the State can attach and sell a motor vehicle for recovery of tax arrears due from the transferor, even if the vehicle has been transferred to a third party prior to the attachment?
Ratio Decidendi: 1. The court held that ownership of a motor vehicle is transferred in the same manner and subject to the same limitations and rules as apply to all other movable property. The court relied on the provisions of the Motor Vehicles Act, which do not prohibit a motor vehicle being owned without its first being registered. The court also held that registration under the Motor Vehicles Act is not a necessary ingredient of a completed title of ownership of a motor vehicle. 2. The court held that the transferee of a motor vehicle is liable for tax arrears due in respect of the vehicle for the period prior to the transfer, even if the registration certificate has not been transferred to the transferee's name. The court relied on section 9(7) of the Punjab Passengers and Goods Taxation Act, which imposes a statutory liability on the transferee to pay tax and penalty, if any, remaining unpaid by the transferor up to the date of transfer. 3. The court held that the State cannot attach and sell a motor vehicle for recovery of tax arrears due from the transferor, if the vehicle has been transferred to a third party prior to the attachment. The court held that the attachment and distraint of the motor vehicle in dispute for recovery of amounts due from respondent No. 5 in respect of vehicle other than the one in dispute was wholly unauthorised and illegal.
Final Decision: The court allowed the writ petition and directed that the vehicle be returned to the petitioner on payment of the arrears of passenger tax due in respect of the vehicle for the period prior to April 1963. The court also directed that if the vehicle had been disposed of in the meantime, the balance of its net sale proceeds after deducting the amount of tax arrears should be paid to the petitioner.
R.S.Narula, J.
1. The straight question to be answered in this case under Articles 226 and 227 of the Constitution is whether transfer of ownership of a motor vehicle is not completed in the same manner in which a transferee of any other movable property becomes its owner under the Sale of Goods Act, because of any provision to the contrary contained in the Motor Vehicles Act, 1939 (4 of 1939), or any other law for the time being in force. The circumstances in which this question has arisen may first be noticed Some arrears of passengers and goods tax were due to the State from the Patiala Transport & Engineering Company Limited Rampura Phul District Bhatinda (respondent No. 5). In recovery proceedings for the same under the Punjab Land Revenue Act, bus No PNB 1180 was attached on December 2, 1965 from the custody of the petitioner, Messrs. Phul Bus Service (Registered), which is a partnership concern. The petitioner submitted written objections to the attachment (Annexure A) on the ground that the bus in question had been purchased by the petitioner from respondent No. 5 in April, 1964 and that even a joint application for transfer of the permit in respect of the said vehicle was pending before the Regional Transort Authority. It was claimed by the petitioner in the said objection petition that whatever tax had been levied on respondent No. 5, pertaining to the period prior to the transfer of the bus to the petitioner was not recoverable by the attachment and sale of the bus in dispute. The objection petition was disposed of by tne order of the Excise and Taxation Officer, Bhatinda, dated January 21, 1966 (Annexure B). It was held that even if it could be admitted that the bus had been purchased by the petitioner in April, 1964, it could not be argued that the arrears due from respondent No. 5 could not be realised by distraint and sale of this very-bus. The ground on which the objections were dismissed was that when the assessment orders, in pursuance of which the recovery was sought to be made, were announced, the bus in dispute was the property of respondent No. 5 "and its registration" still stood in the name of that very respondent. It was held that the petitioners had failed to prove that the abovesaid bus belonged to them.
2. The petitioners appeal to the Collector, Bhatinda, against the above-said order was dismissed by his order dated May 31, 1966 (Annexure C). He took notice of the contention of the Taxation Inspector to the effect that in accordance with section 9 (7) of the Punjab Passengers and Goods Taxation Act, 1952 (hereinafter called the Taxation Act) when any owner transfers any motor vehicle, the transferee is liable to pay tax and penalty, if any, remaining unpaid by the transferer upto the date of transfer and the transferee is not allowed to ply the motor vehicle without getting himself registered or getting the registration certificate amended. Enforcement of the liability of respondent No. 5 against the bus in dispute was, therefore, claimed to be legal on that basis Without deciding that particular point, the Collector went into the question of the quantum of liability and held that the proper forum for raising that dispute was the Deputy Excise and Taxation Commissioner who could hear an appeal against the order of the Excise and Taxation Officer. Not satisfied with the Collectors order, the petitioner went in revision to the Commissioner, Patiala Division The revision petition was dismissed by the order of the Commissioner dated January 10, 1967 (Annexure D) with the following observations :
"The registration of the vehicle, it is admitted, still shows that it belongs to the Patiala Transport and Engineer ing Company Ltd., Rampura Phul. The affidavits such as those whose copies have been produced have little meaning in the presence of the registration certificate. Moreover, the passenger tax assessment orders for their relevant period including the year 1964 show that this vehicle was the p
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